Microsoft Stock In Spotlight As Analyst Raises Concerns Over Software Giant’s Long-Term AI Demand: Retail Turns Uneasy

Microsoft Corp. (MSFT) stock is likely to be on investors’ radar after an analyst raised concerns about the Redmond, Washington-based company’s long-term artificial intelligence (AI) demand.

According to a Bloomberg report, TD Cowen said Microsoft has canceled leases in the U.S. totaling “a couple of hundred megawatts" with at least two private data center operators, citing channel checks or inquiries with supply chain providers.

The company also pulled back on the conversion of statement of qualifications (SQ), which are agreements that usually lead to formal leases

Additionally, Microsoft was reallocating a substantial portion of the planned international spending to the U.S., which pointed to a material slowdown in international leasing. 

The development is construed as a signal of slowing AI demand for Microsoft, which has been among the frontrunners in the AI revolution that began to take hold in early 2023. 

On the second-quarter earnings call in late January, Microsoft said it plans to spend $80 billion on AI data centers in the current fiscal year, which ends in June 2025. 

However, Microsoft refuted the claims of an AI demand slowdown. Citing a statement from the company, Bloomberg said that Microsoft remains on track to spend the earmarked amount. 

“While we may strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions,” it reportedly said.

Stocktwits users reacted to the report with apprehension. One of them pointed out that while AI is set to dominate over the next 10-20 years, Microsoft is slowing down and recalibrating.

Another user expressed worries concerning a situation similar to the dot-com bubble, given TD Cowen’s mention of a “potential oversupply position for Microsoft.”

In premarket trading on Monday, Microsoft stock rose 0.50% to $410.28 following the 1.88% fall on Friday amid the broader market sell-off.

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