Microsoft’s $5 Billion Data Center Delay, DigitalOcean CEO on AI Infrastructure Boom

Microsoft cuts $5bn in capex as data center delays bite

Guest interviews

• Paddy Srinivasan, CEO of DigitalOcean. DigitalOcean had its best quarter in over ten years, with 680,000 paying customers and no customer above high single digits of concentration. It guided to more than 60% growth next year at over $1bn of scale while profitable, and earns $18m per megawatt by monetizing software, not just renting GPUs. Srinivasan expects the supply-demand imbalance to last 18 to 24 months and sees agentic knowledge work and physical intelligence as the next waves.
• Aaron Holmes, technology reporter at The Information covering Microsoft. Holmes found that Iren's Texas campus, which Microsoft expected to lease this year, has slipped, and that Iren is most of the $5bn capex cut. The Microsoft-Iren deal runs about $10bn over five years, roughly $1.8bn a year once capacity is live, and Microsoft only pays once it is a tenant. He says the delays hurt neo clouds more than Microsoft, which has software cash flow and no need to raise debt.
• Yueqi Yang, crypto reporter at The Information. Yang reports that big banks are blocking agents, with Jamie Dimon saying JPMorgan will block all third-party agents and Wells Fargo and Bank of America shifting liability to customers who hand over logins. Fintech-friendly banks such as Lili, Cross River, Column and Lead Bank treat agents as another API use case, using prepaid cards and spending limits. Lead Bank works with Stripe on single-use virtual cards for agents, and Column works with Natural on FDIC-insured subledgered wallets.

News

• Microsoft cuts $5bn as Iren campus slips. Microsoft cut about $5bn from September-quarter capex after Iren's Texas campus, due to deliver capacity this year, slipped. Holmes says Iren is likely most of the cut and the delay pushed the first payment out of the quarter.
• Big banks block agents, fintech banks adopt. Dimon said JPMorgan will block all third-party agents, and Wells Fargo and Bank of America put liability on customers who give agents access. Yang says Lili, Cross River, Column and Lead Bank offer scoped access via prepaid cards and limits.
• Microsoft says GPU rental demand outruns supply. Microsoft says demand for GPU rentals exceeds what it can serve while it reserves chips for Copilot and its own models. Holmes says rental rates could rise after the midterms, lifting revenue for cloud providers and big labs.
• Microsoft exits EnScale data center sites. Power connection at the London data center would have taken until at least 2030. Microsoft also declined an option to commit more spending at an EnScale Texas site, Holmes says.
• Pasricha says neo cloud stocks have been hit hard over two weeks amid debt concerns and the election, and DigitalOcean's shares are down about 17% in the last week despite strong earnings.