Microsoft’s Data Center Pullback: Who Are the Likely Lessors?

The data center industry has been sent into a frenzy with recent reports that Microsoft has canceled select leases with at least two private data center operators in the U.S., totaling "a couple of hundred MWs." According to TD Cowen, Microsoft’s cancellations involve leases with at least two private data center operators, and Microsoft has also pulled back on converting Statements of Qualifications into formal leases.

Our clients have been asking the question: Who was the lessor left holding the bag after Microsoft abruptly canceled hundreds of megawatts in data center leases? Industry whispers point to a handful of key players that we will review.

Let’s go back a month before this lease cancellation.

In January 2025, Microsoft said it plans to spend $80B on building AI data centers in the 2025 financial year, The $80B would reflect a significant increase on the $53B CAPEX spend Microsoft made in 2023. Below comes officially from Microsoft:

Two weeks ago, Microsoft CEO Satya Nadella sat at an interview in an hour-long session.

When asked for data center investments, Nadella acknowledges that some people compare the current data center expansion to a "bubble," similar to the 1990s dot-com era. However, he argues that the infrastructure built during that time laid the foundation for the modern internet. He implies that the current AI-driven data center expansion is likely a long-term, foundational investment rather than a fleeting trend.

He emphasized that Microsoft is not just blindly expanding compute capacity but is carefully balancing infrastructure investments with actual AI workloads.

After this interview comes the news of lease cancellation.

Given all this, our clients are wondering what’s really happening behind the scenes. Is this merely a product of supply chain constraints, or is it evidence of a deeper strategic shift—perhaps involving DeepSeek or a more extensive partnership with Oracle?

In this article, we will discuss:

1. The Race for AI Compute: Global Data Center Demand Through 2030

   1. Goldman Sachs, Gartner and McKinsey Report Review

2. Microsoft’s Surprise Pullback: Why the Lease Cancellations Sent Shockwaves

   1. Understand Data Center Lease Staging: SOQ, 500 docs and Final Sign

3. The DeepSeek Theory: A Game-Changing AI Shift or Mere Speculation?

   1. The Oracle Hypothesis: A Shift in AI Cloud Alliances?

   2. Who Was Left Holding the Bag? : Likely Lessors

4. The Supply Chain and Power Bottleneck Narrative

5. A Domino Effect? What This Means for Other Hyperscalers