TD Cowen’s note outlining Microsoft’ s abandonment of two data center projects added fuel to the sell-off in Big Tech shares Wednesday. According to analyst Michael Elias, Microsoft walked away from the two data centers — which were expected to have more than 2 gigawatts of capacity — in the U.S. and Europe over the past six months. The Windows and Xbox company has also delayed or canceled data center leases over the past month, he added. Microsoft traded 1.3% lower Wednesday, snapping a three-day rebound, while the tech-heavy Nasdaq Composite dropped more than 2%. Artificial intelligence chipmaker Nvidia tumbled 6%, bringing its one-month decline to more than 13%. Vertiv Holdings, a provider of infrastructure and services for data centers, slid 11% on Wednesday, its worst day since July. “In our view, the pullback on new capacity leasing by Microsoft was largely driven by the decision to not support incremental Open AI training workloads,” Elias wrote in a research note published Wednesday. “However, we continue to believe the lease cancellations and deferrals of capacity points to data center oversupply relative to its current demand forecast.” According to Elias, Google parent Alphabet is stepping in to take over some of the backfill capacity Microsoft’s canceled leases have left globally, while Meta Platforms is assuming the void in the U.S. market. “Both of these hyperscalers are in the midst of a material Y/Y ramp in data center demand,” Elias said. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
