- Microsoft’s abrupt cancellation of data center leases has sent AI and Bitcoin mining stocks tumbling.
- Despite the rising tide of corporate interest, Microsoft turned its back on the Bitcoin investment proposal.
Ah, the AI sector, once a beacon of hope, now finds itself in a tempest, all thanks to Microsoft’s whimsical data center strategy. One can almost hear the collective gasp of investors as they clutch their pearls.
According to the esteemed analysts at TD Cowen, Microsoft has decided to cancel over 2GW of planned data center leases across the U.S. and Europe. It seems they’ve taken a page from the book of procrastination, with further cancellations and deferrals popping up like mushrooms after rain.
This curious maneuver appears to be linked to Microsoft’s decision to scale back support for additional OpenAI training workloads. Could it be that the data center market is suffering from an embarrassing oversupply? One can only speculate.
The repercussions are already palpable, as AI chipmakers NVIDIA and Broadcom have seen their stocks plummet by 5%. Meanwhile, the valiant AI server providers, Dell and Super Micro, have also joined the downward spiral, falling by 3% and 9%, respectively. A veritable stock market ballet of despair!
In a conversation with Bloomberg, the analyst at TD Cowen remarked,
“We believe the lease deferrals are intended to provide Microsoft with a medium-term runway of capacity in major markets to support cloud/inference workloads, with Microsoft canceling leases for capacity that exceeds its updated medium-term capacity needs.”
Yet, as Microsoft retreats, Google is gallantly stepping in to fill the void on the international stage, while Meta is hoarding capacity like a squirrel preparing for winter in the U.S.
The analyst further added,
“The ramp in demand from Google is driven by what we increasingly believe is a global capacity shortfall as its internal demand ramped amid its late August pullback from the market.”
Bitcoin mining stocks are not spared!
And what of the Bitcoin mining stocks? They too have felt the sting, with fears of an impending oversupply looming large.
It’s no surprise that this move has triggered declines of 4% to 12% in shares of major crypto miners like Bitfarms, CleanSpark, Core Scientific, Hut 8, Marathon Digital, and Riot. A veritable bloodbath in the crypto waters!
This unfortunate turn of events followed Microsoft shareholders’ decision to reject a proposal to allocate company reserves to BTC. A classic case of “not my circus, not my monkeys.”
What should the miners do?
In light of these developments, JPMorgan has previously noted that miners have been grappling with profitability in this unforgiving environment.
The slowdown in AI data center investments could further squeeze their revenue streams. With AI-driven demand becoming as essential to miners’ business models as air is to breathing, Microsoft’s decision to curtail data center expansion raises eyebrows and concerns alike.
As the market dynamics shift like the wind, miners may find themselves needing to adjust their strategies, lest they become relics of a bygone era. After all, adaptability is the name of the game, and one must always be ready to dance to the tune of change!
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2025-03-27 23:10