Microsoft rethinks AI data centre strategy amid market shifts

Microsoft has reportedly scaled back or delayed several major data centre projects, just three months after announcing plans to invest $80 billion in AI infrastructure through the current fiscal year.

According to Bloomberg, the company has paused developments in multiple locations, including Australia, Indonesia, the United Kingdom, and US states such as Illinois, North Dakota, and Wisconsin.

Instead of denying the report, Microsoft confirmed adjustments to its plans, citing the need for long-term flexibility. A spokesperson said the company continuously reviews future infrastructure needs to ensure alignment with growing AI demand, adding that the changes reflect Microsoft’s adaptable strategy.

The halted projects include negotiations for high-performance AI chip facilities in the UK and a site near Chicago, along with construction delays in Jakarta and Wisconsin.

These moves come amid growing scrutiny over whether the AI sector is entering a bubble, especially as emerging models challenge the assumption that vast computing power is always necessary for innovation.

Instead of sticking to high-cost development, Microsoft may be responding to a new trend: efficient, lower-cost AI models from Chinese firms that rival those of Western tech giants.

With AI development costs dropping and access expanding, Microsoft’s strategic pause could reflect a shift towards a more sustainable and agile future in AI infrastructure.

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