Microsoft (MSFT, Financial) has quietly paused about 1.5 gigawatts of self-built data-center capacity, but don't read too much into it—Wells Fargo insists this is just part of an “evolving” dance with OpenAI, not a sign that Big Blue is pulling back on AI spending.

Analyst Eric Luebchow points out that even after shelving over 2 GW of projects, Microsoft still has more than 5 GW of turnkey, pre-leased capacity coming online through 2028, underscoring that its long-term bets are still very much in place.

Digging into the details, early Q1 data-center usage looks strong, suggesting these pauses are about shifting mix rather than cutting back. OpenAI itself has been snapping up capacity—more than 2 GW since late 2023, including a 1.2 GW deal in Abilene, Texas, and an $11.9 billion pact with CoreWeave (CRWV, Financial) in Denton, Texas. Meanwhile, Project Stargate—OpenAI's big AI infrastructure push with SoftBank (SFTBY, Financial) and Oracle (ORCL, Financial)—continues to scout U.S. sites for another 5 GW, so this isn't a story of decelerating momentum but rather one of diversification.

Microsoft isn't walking away from self-builds, either. The company chalked up “substantial” progress in 2023 and 2024 across Wisconsin, San Antonio, Virginia, Indiana, Chicago, and Northern California, and its remaining pipeline still ranks among the tech sector's most ambitious AI commitments. According to GuruFocus's Valuation Rank, MSFT trades at a modest premium to its five-year average, reflecting investor faith in this multi-front approach.

Why this matters is simple: any hint that Microsoft is throttling back on AI could spook the market and put pressure on its lofty valuation multiples. But if you dig deeper, you'll see that these pauses likely mask a deeper, more flexible alliance with OpenAI—and that AI-related revenue growth could drive robust annual top-line bumps over the next few years.

Shares closed at $393.07 on April 29, bouncing off mid-April lows but still down about 9% from the highs. The stock's recent volatility reflects this broader back-and-forth narrative, and you'll want to see MSFT clear past resistance around $412 before calling it a full turnaround. With Q2 results due after the close on April 30—analysts expect $3.22 in EPS on $68.43 billion in sales—the real headline to watch will be CEO Satya Nadella and CFO Amy Hood's take on data-center mix, OpenAI's next moves, and whether Microsoft's AI engine continues to rev up.