Microsoft, one of Open AI's backers, doesn't seem to be as bullish on AI as other companies

Microsoft, a major investor in OpenAI, appears to be tapping the brakes on its aggressive push into artificial intelligence infrastructure. Recent moves by the company suggest it may be reassessing how much computing power it actually needs, and whether the AI boom can live up to its hype.

According to Bloomberg, Microsoft recently canceled leases for US data centers with hundreds of megawatts of power capacity and put a hold on early-stage agreements that typically lead to new deals. Analysts at TD Cowen, who first spotted the shift, say the company is also redirecting planned international investments back to the US. Data centers consume enormous amounts of energy, and pulling back on expansion could mean Microsoft isn’t seeing as much demand for AI services as anticipated.

This seems to have rattled markets. Shares of European energy companies like Schneider Electric and Siemens Energy dropped, as investors worried that tech giants might not need as much power as once thought.

This news comes at a time when other tech giants, like Meta and Amazon, are pouring billions into AI data centers. But there’s growing concern about whether there’s enough demand for all this AI power.

Some critics argue there aren’t enough practical, everyday uses for AI yet, despite the huge investments. To add to the mix, a Chinese startup called DeepSeek recently launched an open-source AI model that claims to match US technology but at a much lower cost. This could make it harder for companies to justify their massive AI spending.

Microsoft’s CEO, Satya Nadella, has also shared some thoughts on AI that suggest a more careful approach. In an interview covered by Forbes, Nadella pushed back against the hype around artificial general intelligence, or AGI. That’s the idea of AI that can do any task a human can.

Nadella called chasing AGI milestones “nonsensical” and said the focus should be on practical uses and growing the economy. He said, “Stop claiming some AGI milestone. The real benchmark is the world growing at 10%.” He sees AI as a tool to help people, not replace them, and warned that data centers might be overbuilt. You can watch the full podcast interview below:

.@satyanadella on:

– why he doesn’t believe in AGI but does believe in 10% economic growth

– Microsoft’s new topological qubit breakthrough and gaming world models

– whether Office commoditizes LLMs or the other way around

Links below. Enjoy!

Timestamps
0:00:00 – Intro… pic.twitter.com/ywwCsPn1xd

— Dwarkesh Patel (@dwarkesh_sp) February 19, 2025

Still, Microsoft isn’t pulling out of AI entirely. The company plans to spend $80 billion on AI data centers this year, and Nadella has stressed the need to meet growing demand. But his comments and the company’s actions suggest Microsoft isn’t as eager as others to chase the AI spotlight.

So, is Microsoft being smart by taking a slower, more careful approach? Or is it missing out on the next big thing? As the AI race heats up, it’s a question worth watching. For now, Microsoft seems happy to focus on steady progress rather than flashy breakthroughs.