Whoops
Interesting article.
Data center buildouts take about three to six years to complete, and the largest hyperscale facilities can easily cost several billion dollars, meaning that these moves are extremely forward-looking. You don’t build a data center for the demand you have now, but for the demand you expect further down the line. This suggests that Microsoft believes its current infrastructure (and its likely scaled-back plans for expansion) will be sufficient for a movement that CEO Satya Nadella called a “golden age for systems” less than a year ago.
To explain here, TD Cowen is effectively saying that Microsoft is responding to a “major demand signal” and said “major demand signal” is saying “you do not need more data centers.” Said demand signal that Microsoft was responding to, in TD Cowen’s words, is its “appetite for capacity” to provide servers to OpenAI, and it seems that said appetite is waning, and Microsoft no longer wants to build out data centers for OpenAI.
I believe the reason Microsoft is cutting back is that it does not have the appetite to provide further data center expansion for OpenAI, and it’s having doubts about the future of generative AI as a whole. If Microsoft believed there was a massive opportunity in supporting OpenAI’s further growth, or that it had “massive demand” for generative AI services, there would be no reason to cancel capacity, let alone cancel such a significant amount.
Oh thank fuck. Finally some steps away from AI. It was starting to feel like everything was AI all the time.
For a lot of computing workloads, including AI inference (and training), the user won’t notice the difference if it’s being done in a different country.
With the US’s ‘100% tariffs on Taiwanese chips’ to be taken ‘seriously, but not literally’, at some point it makes sense to build additional ‘AI’ capacity in Canada instead.
I tried to find additional info on the report’s ‘re-allocating a considerable portion of [its] projected international spend to the US’, but I am unable to find the original report, to see if there were additional pages.
Isn’t it a volatile time to invest in something that could have very major price swings?
I read somewhere someone supposed it had to do with SoftBank building out data centers to host this nonsense.
Which, given the history of SoftBank’s investing, is utterly hilarious and appropriate.
