Elaine Thompson/AP
- Microsoft said third-party data center delays contributed to a shortfall in infrastructure spend.
- Satellite imagery points to potential setbacks for the massive IREN and Nebius data center projects.
- Neoclouds are under mounting pressure to deliver on their multibillion-dollar promises.
Microsoft spent $5 billion less than expected on AI last quarter, and satellite images may show why.
In Microsoft's quarterly earnings call last month, chief financial officer Amy Hood said delays by third-party cloud providers contributed to lower-than-expected AI infrastructure spending. Microsoft cut its annual capital expenditure forecast by $5 billion.
The news sent neocloud stocks tumbling, highlighting concerns that the young companies can't deliver on their multibillion-dollar promises.
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.
The research firm Currence estimates that 30% to 50% of planned data center capacity initially scheduled to come online this year could be pushed into 2027 or later due to electricity shortages and other construction issues.
A Microsoft spokesperson said its "approach to infrastructure is built on flexibility and optionality," combining its own data centers with leased facilities and third-party providers.
IREN and DataOne declined to comment for this story. Nebius did not respond to a request for comment from Business Insider.
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