Key Takeaways

  • A Microsoft executive said in a recent LinkedIn post that the company is "slowing or pausing" someAI data center projects, confirming earlier media reports about the adjustment.
  • Noelle Walsh, President of Microsoft's Cloud Operations and Innovation, said she decided to respond given the "strong interest in some of the early data center infrastructure projects we are adjusting."
  • "While we may adjust our pace strategically, we will continue to grow strongly and maintain investments aligned with business priorities and customer demand," Walsh said in the LinkedIn post.

Deep Dive

Bloomberg reported earlier this month, citing anonymous sources, that Microsoft had paused negotiations or delayedmultiple data center projects globally.

"In recent years, demand for our cloud and AI services has grown beyond our expectations. To seize this opportunity, we launched the largest and most ambitious infrastructure expansion in our company's history. Any new initiative of this scale requires us to remain flexible and continuously optimize as we learn and grow with our customers. This means we are slowing or pausing some early projects," Walsh wrote in the post.

In January, Microsoft President Brad Smith said the company planned to spend about$80 billionthis fiscal year on AI data centers to train large language models and deploy AI and cloud applications.

A spokesperson told CFO Dive that despite Walsh's comments, the company remains on track to meet that spending target, adding that it had no further information to share.

The adjustment comes as Microsoft and other large tech companies faceincreasingly intense scrutiny from investors。

over their hefty AI spending, while U.S. President Donald Trump's unpredictabletariff measureshave also brought additional pressure and uncertainty to tech executives.

Wedbush analysts called the current tariff situation an "economic Twilight Zone," saying it has "caused substantial damage to corporate spending psychology."

"We estimate that 10% to 15% (potentially conservative) of the many cloud and AI projects we track in the U.S. could be delayed or slowed during this uncertain period, and Microsoft will be at the center of this economic uncertainty," analysts said in a research note last week.

The government imposed broad new tariffs on imported goods on April 2, but has since partially rolled them back. On April 9, Trump announced a 90-day pause on tariffs for some goods from most U.S. trading partners, while raising tariffs on Chinese goods to 125%, triggering a full-blown trade war with China. China retaliated by raising tariffs on U.S. imports to 125%.

Other U.S. tariffs that remain in place include a 10% baseline tariff on trading partners targeted in Trump's April 2 announcement, as well as tariffs on steel and aluminum imports.

Meanwhile, on Sunday,Commerce Secretary Howard Lutnicksaid the administration's Friday decision to exclude electronic devices such as smartphones, iPhones, and laptops from reciprocal tariffs (including the 125% tariff on Chinese imports) is only temporary relief, and these products are expected to face separate tariffs in the near future.

Before Friday's announcement, analysts had predicted that reciprocal tariffs would be devastating to IT hardware companies with significant production operations in China. Morgan Stanley analysts estimated that Apple alone could face annual sales impacts of up to $33 billion.

Hank Galligan, BDO's national technology sector leader, said tariffs could also potentially harm the tech industry by prompting corporate clients to tighten IT spending and by raising the cost of raw materials like steel needed to build data centers.

"Obviously, costs will affect the scale of capacity that can be built," he said in an interview.