Microsoft has announced it is slowing or pausing some of its data centre construction, including a $1 billion facility in Ohio. This marks a shift from the aggressive expansion fueled by the AI boom, suggesting that the anticipated need for high-powered computing may have been overestimated.
The company confirmed it is halting early-stage development on rural land in Licking County, near Columbus, Ohio. Two of the three planned sites will now remain as farmland. Noelle Walsh, president of Microsoft’s cloud operations, stated on LinkedIn that demand for cloud and AI services had grown beyond expectations, leading to the company’s largest-ever infrastructure expansion. However, she emphasized the need to adapt and refine projects over time, resulting in delays or pauses in some early initiatives.
Although Microsoft didn’t name other specific projects affected, it had previously paused the later phases of a major data centre project in Wisconsin. Analysts from TD Cowen also reported that Microsoft has scaled back some international expansions and canceled U.S. leases for third-party data centres.
Industry experts link these changes partly to evolving dynamics with OpenAI, Microsoft’s key AI partner. While OpenAI is focusing on building more advanced AI models requiring heavy computing power, Microsoft appears to be taking a different route. In January, the companies revised their partnership, ending Microsoft’s exclusive role in providing computing resources. OpenAI is now allowed to develop its own infrastructure for AI training and research.
That same day, President Donald Trump promoted a new $500 billion AI infrastructure plan backed by OpenAI, Oracle, and SoftBank, starting with a large data centre in Texas.
Microsoft has historically built data centres globally to support its cloud services. The recent surge in AI usage pushed demand even higher, as running AI tools consumes significant power and computing resources. In fact, the energy demands of AI have been cited by Trump to support reviving the coal industry, while tech companies also look into nuclear energy — including a Microsoft-supported plan to revive the Three Mile Island plant to supply data centres in Ohio and Virginia.
Despite the slowdown in some areas, Microsoft says it will still invest over $80 billion globally this fiscal year in AI infrastructure and has already doubled its data centre capacity over the past three years. Walsh assured that while plans may be strategically paced, the company remains committed to strong growth aligned with business and customer needs.
However, the pause in Ohio has been disappointing for local officials. The region has also drawn interest from Google, Meta, and Intel — the latter delaying its own semiconductor project until 2030.
