Microsoft Cut AI Spending Forecast by $5 Billion. Satellite Firm Points to Delays at Two Partner Sites

Microsoft spent $5 billion less than expected on AI infrastructure last quarter and cut its annual capital expenditure forecast by the same amount, Business Insider reported. On the October earnings call, CFO Amy Hood said delays by third-party cloud providers contributed to the shortfall.

She did not say which providers. Satellite analysis from the research firm Aterio suggests where to look.

The Texas site

IREN is building four data centers in Texas under a $9.7 billion deal with Microsoft. An October 21 satellite flyover found the fourth building, Horizon 4, still missing backup power generators and cooling equipment, Aterio said. The firm said that puts the building's year-end delivery date at risk.

Horizon 1 has already run late. IREN previously said equipment shortages delayed it, and Microsoft accepted the building in August.

IREN declined to comment.

The New Jersey site

The second project is in New Jersey. Data center operator DataOne is developing it for Nebius under a $17.4 billion deal with Microsoft. Aterio said roughly 140 megawatts of planned capacity could slip into 2027.

Aterio data analyst Daud Shiraz said the developer struggled to get permits for its original power generators, then hit more approval delays after switching to fuel cells. Regulators fined DataOne $1 million in September for operating generators without the required permits.

DataOne declined to comment. Nebius did not respond to a request for comment.

Aterio's work is an inference from imagery. Neither Microsoft nor Hood has linked these two projects to the spending shortfall.

A pattern, not a one-off

In October, Microsoft ended a deal with another neocloud, Nscale, over power-supply delays. The project was a planned AI data center in Loughton, Essex, built with Nscale and Nvidia. Grid officials told Nscale electricity might not be available there until the 2030s. Nscale says it remains committed to finding alternative power sources.

The research firm Currence estimates that 30% to 50% of data center capacity originally scheduled to come online this year could be pushed into 2027 or later because of electricity shortages and other construction problems. That is an estimate, not a count.

The delays came as the neocloud stocks fell after Hood's remarks, according to Business Insider. Investors are asking whether young companies with multibillion-dollar contracts can build what they promised.

Microsoft says its infrastructure strategy remains flexible. A spokesperson said its "approach to infrastructure is built on flexibility and optionality," combining its own data centers with leased facilities and third-party providers.

Voters weigh in on the other end of the pipeline

The supply side is not the only pressure. Local resistance to data centers showed up on ballots in Tuesday's midterm elections.

The tracker Data Centers on the Ballot shows 33 measures restricting data center development have won, with six more leading. Only one has failed: a measure in Harwood, North Dakota, that adds an extra review process for industrial projects including data centers. Five measures have no posted results. These are early returns.

The measures vary widely, from permanent bans and moratoriums to limits based on size or power consumption. Voters also recalled the mayor and two council members in Piqua, Ohio, and the mayor of Yukon, Oklahoma, who had previously supported data center bans.

A separate tracker of 46 measures across 10 states shows all 33 restrictive measures on track to pass, and 11 of 13 measures that would permit data centers on track to fail.

The votes cut against the Trump administration's push for AI development. The administration has responded with steps aimed at the local complaint over costs: an energy dividend for host communities and a "ratepayer protection pledge" asking tech companies, governors and utilities to pay their own way.

The local bans have not yet dented the pipeline much, according to figures cited by Tom's Hardware. Of more than 300 local bans enacted nationwide, only three developments totaling 2.3 gigawatts have been delayed, while 38 gigawatts are expected online by 2027. Those numbers predate Tuesday's results.

What to watch

Horizon 4 is the nearest test. IREN's year-end delivery date is weeks away, and Aterio's imagery showed generators and cooling gear still absent on October 21. Whether Microsoft accepts the building on schedule will show if Hood's shortfall was a timing blip or the start of a longer slide.