Meta’s 64% Crash In 2022 Started With This Move… Now Microsoft Is Copying It

If Friday’s market chaos taught us anything, it’s that we can go from full-blown euphoria to full-scale “the bubble’s about to pop” in the blink of an eye. And this morning? More of the same. Microsoft just threw up a major warning sign that historically has ended badly (to say the least).

Bill Gates’ company (whose stock is already down 8% this month) just decided to cancel a few hundred megawatts’ worth of data center leases in the U.S. If that sounds like a lot, it is. Microsoft was supposed to be on a never-ending shopping spree to power its AI revolution, but now, it’s returning items as fast as they can (kinda reminds me of when I bought a shovel from Amazon, instant regret).

TD Cowen’s latest report suggests Microsoft may have overestimated demand, putting itself in an AI overcapacity situation. Essentially, Microsoft stockpiled way too many data centers in preparation for an AI-powered future that, as of now, still hasn’t arrived. The company is also redirecting international spending back to the U.S., signaling a major slowdown in its global AI push.

Microsoft’s CEO Satya Nadella is usually the guy hyping AI like it’s the second coming of sliced bread, but even he’s sending warning signs. On a recent podcast, he basically admitted AI isn’t creating much real-world value yet. And he has a point. Everyone has been running around screaming “AI is the new Industrial Revolution!” while the actual economy is… not growing at 10% a year.

Nadella said the real test of AI’s impact is whether it actually improves global productivity. Until then? It’s all speculation. Which makes Microsoft’s latest moves make a lot more sense… If AI demand isn’t accelerating, why keep throwing billions at it like a drunk hedge fund manager?

Then there’s the OpenAI situationship. Microsoft has been the AI startup’s sugar daddy since the very beginning, dumping $12 billion into its ChatGPT-powered empire. But lately, OpenAI has been flirting with Oracle and other cloud providers. Analysts suspect Microsoft’s AI spending cutbacks could be directly tied to OpenAI hedging its bets. After all, if OpenAI is outsourcing some of its workloads elsewhere, Microsoft suddenly has way too many data centers with not enough AI demand to fill them.

This also comes right after the Chinese AI firm DeepSeek rattled the industry by rolling out an AI model just as good as OpenAI’s… but for a fraction of the cost. If AI computing power is about to get cheaper, Microsoft’s investment strategy suddenly looks a whole lot riskier.

The worst part is that Microsoft isn’t alone. Meta did the exact same thing in 2022 when it realized it had built too many data centers (and we all know what happened next: Meta’s stock crashed 64% and the S and P crashed 20%). The company freaked out, and sure enough, Wall Street freaked out. Now, it’s Microsoft’s turn.

Stocks tied to AI infrastructure, like Schneider Electric and Siemens Energy, have already started selling off. And with Microsoft stock down nearly 8% this month, there’s a real risk this slide could get worse as investors realize the AI engine might have been running a little too hot.

For the last year, AI stocks have been going straight up. Nvidia, Microsoft, and all their AI buddies have been cashing in on hype, promising a future where AI takes over everything from customer service to stock-picking (which, let’s be real, it’s not doing great at).

But what happens when the companies that have been screaming “AI is the future” suddenly start pulling back?

If Microsoft (a company willing to spend $80 billion on AI) just admitted it might have too much capacity, that should be a massive wake-up call. AI isn’t dying, but the get-rich-quick era might be ending. The real question now? Can AI actually deliver on the insane expectations that investors have priced in?

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Stock.News has positions in Microsoft, Amazon, and Meta.