From the article: [...] [...] Another article: Satellite images reveal trouble brewing at Microsoft's AI data center partners
From the article:
The numbers suggest a slowdown is nowhere in sight, but they do represent another potential point of concern for the AI buildout. Shares of neoclouds CoreWeave, Nebius and IREN all dropped after the reports, as did Oracle, which is one of the biggest spenders on AI infrastructure.
Microsoft CFO Amy Hood said on the software company’s earnings call that third-party providers of graphics processing units had delays that will push out some available capacity until the first half of 2027. She didn’t provide names, but Microsoft relies on CoreWeave, IREN and Nebius, among others.
Anat Ashkenazi, Alphabet’s finance chief, told analysts that outside computing power “came online only at the very end of Q3.” Alphabet shares tumbled about 10% in extended trading as the company missed on earnings and revenue and reported negative free cash flow of more than $9 billion.
[...]
Delays from emerging neocloud partners have occurred before at Microsoft, but they’re more critical now as Anthropic gets set to go public. Anthropic counts on infrastructure from Amazon, Google and Microsoft for much of its computing needs, alongside capacity from SpaceX, Lambda and Nscale, which filed to go public in September but hasn’t updated its prospectus in weeks.
[...]
One big challenge for the market is that the neoclouds require billions of dollars in outside capital to fuel their buildouts but don’t have investment-grade credit ratings. With interest rates rising and concerns about their debt loads mounting, lenders are pulling out of the market.
Last week, analysts at Gartner shared with CNBC the firm’s prediction that, by 2030, 80% of neocloud companies will either be absorbed or completely cease operations. Nvidia-backed neocloud Firmus, based in Australia, withdrew plans to go public earlier this month, despite boasting large usage commitments from Meta and OpenAI.
Although Microsoft didn't name names, two data center projects from neoclouds Iren and Nebius could be responsible, according to satellite analysis from research firm Aterio.
In Texas, IREN is building four data centers under a $9.7 billion deal with Microsoft. An October 21 satellite flyover found that one of the buildings, Horizon 4, was still missing backup power generators and cooling equipment — and risked missing its scheduled delivery by the end of the year, Aterio said.
IREN previously said that equipment shortages had delayed the first building, Horizon 1, which Microsoft accepted in August.
Data center operator DataOne is developing the second project in New Jersey for Nebius under a $17.4 billion deal with Microsoft. Aterio said roughly 140 megawatts of that project's planned capacity could slip into 2027.
It struggled to get permits for its original power generators, then faced more approval delays after switching to fuel cells, said Aterio data analyst Daud Shiraz. Regulators fined DataOne $1 million in September for operating generators without the required permits.
The potential delays point to broader struggles. In October, Microsoft axed a deal with another neocloud, Nscale, due to power-supply delays.
This was one of my major warning signs for AI bubble collapse. So far it's happening right on schedule. Right now my (literal, though small) money is betting on a huge market drop between June and...
This was one of my major warning signs for AI bubble collapse. So far it's happening right on schedule. Right now my (literal, though small) money is betting on a huge market drop between June and August 2027.
The hyperscalers slowing the capex flow is going to make the debt that much more expensive.
For those that remember that extensive chat I posted with Kagi Assistant, here is the read of what to watch for next:
Anthropic IPO: Priced above $1.4T: Credit line is still open. Postponed: It's shut, probably permanently.
NVIDIA posts earnings on Nov 17th:, showing earnings up to Oct 25th. The P/L will look fine and tell us nothing because everything that has transpired since won't be factored, at all.
The number that matters is the supply commitment line: $279B, up from $119B in one quarter. Three possible readings:
Reading
What it means
Grows again
Management still sees demand; the option layer is alive
Flat
The first public admission of demand discipline — the single most informative datapoint available
Falls
Commitments being unwound; the cycle has turned in Nvidia's own accounting
Also watch purchase-obligation provisions off the $6.3B first-half base, and whether guidance starts using "visibility" language instead of "demand."
@R3qn65 :)
....but seriously, genuinely interested in your thoughts.
From the article:
[...]
[...]
Another article:
Satellite images reveal trouble brewing at Microsoft's AI data center partners
This was one of my major warning signs for AI bubble collapse. So far it's happening right on schedule. Right now my (literal, though small) money is betting on a huge market drop between June and August 2027.
The hyperscalers slowing the capex flow is going to make the debt that much more expensive.
For those that remember that extensive chat I posted with Kagi Assistant, here is the read of what to watch for next:
@R3qn65 :)
....but seriously, genuinely interested in your thoughts.