Source: Bloomberg (paywall)
Microsoft's pullback reflects a recalibration in the cloud-and-AI expansion. Even the company that architected this shift now faces unmanageable regulatory friction and cost overruns. The "neocloud" boom that generated tens of billions in contracts is hitting hard infrastructure limits—delays, regulatory barriers, and economics that don't work. Microsoft is abandoning projects rather than absorb mounting losses. The infrastructure layer of AI deployment is more constrained than the hype cycle acknowledged. CapEx-heavy players face years of margin pressure before these bets pay off.