Microsoft Cuts AI Spending Forecast by $5 Billion

Microsoft reduced its annual capital expenditure forecast by $5 billion after delays from third-party cloud providers hindered its AI infrastructure spending. Chief Financial Officer Amy Hood attributed the lower spending to setbacks among neocloud partners, including the cancellation of a deal with Nscale Global Holdings Limited in October due to power-supply delays.

Infrastructure challenges are concentrated across several U.S. sites. In Texas, IREN's Horizon 4 facility lacks necessary cooling equipment and backup power generators, threatening its year-end delivery. In New Jersey, a project for Nebius Group developed by DataOne USA faces permitting issues and fines for unauthorized generator use, potentially delaying 140 megawatts of capacity until 2027.

Industry data suggests these are systemic issues. Research firm Currence estimates that electricity shortages and construction hurdles could push 30% to 50% of planned data center capacity for the current year into 2027 or later.