Microsoft in Wisconsin; some national data center plans canceled, raising questions

MOUNT PLEASANT, Wis. - Microsoft is canceling some data center leases in other parts of the country.

What, if anything, does that mean for the technology giant's billions planned for Racine County?

Microsoft, which now owns about 1,900 acres in Mount Pleasant, tells FOX6 it's still committed to the original plans for a $3.3B investment in Wisconsin.

What we know:

What was once Mount Pleasant farmland is being transformed to become a future home for Microsoft artificial intelligence data centers.  The company owns roughly 1,900 acres in Mount Pleasant.

But, financial analysts at TD Cowen, a division of TD Securities, say Microsoft is cutting back elsewhere.

They found Microsoft canceled renting from at least two private data center operators and also walked away from finalizing some other leases.

The report says their initial reaction is that "this is tied to Microsoft potentially being in an oversupply position."

The TD Cowen analysts also mentioned Microsoft's December decision to pause some construction in Wisconsin.

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In December, the Village of Mount Pleasant said Microsoft paused some construction "to incorporate new data center designs," but that the village stated it didn’t expect the overall scope of the project to change.

The village added:

"Microsoft to date has proceeded with construction of its data center development in Mount Pleasant at an unbelievably fast pace. The company is years ahead of schedule in satisfying its financial commitments to the village under our development agreement."

What they're saying:

Since the TD report on February 21, 2025, Microsoft's stock has dropped about $15.

Annex Wealth Management’s chief economist, Brian Jacobsen, said people had questions. But his view is different.

"I understand why the market was reacting to it and why people might be wondering what’s going on, because if they are canceling leases, does it mean that they have overestimated demand for their data centers and are they beginning to pull back?" he said. "They have actually been leasing a lot of data centers, but they also own a lot of data centers. And I think that Microsoft really wants to be committed to data centers and they would just really rather own, rather than regularly renew leases.

"Keep in mind, Microsoft owns and leases more than 300 data centers, so if they cancel leases on two of them, which is what the report suggests, that doesn’t worry me too much about their commitment to building and owning those data centers over the long term."

Microsoft's response:

A Microsoft spokesperson told FOX6 News:

"Our plans to spend over $80B on infrastructure in the US this fiscal year remain on track, and our $3.3B commitment to Wisconsin remains unchanged as we continue to grow at a record pace to meet customer demand."

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That the same $3.3 billion Microsoft originally proposed for Wisconsin.

Foxconn déjà vu

The backstory:

It might be déjà vu for some remembering Foxconn.

In 2018, Foxconn promised 13,000 jobs for Wisconsin. That large number didn't materialize at the site in Mount Pleasant. Instead, the company recently stated it was employing more than 1,000 workers in Wisconsin. Much of the land Microsoft purchased was originally cleared for Foxconn, which had the first option to purchase it.

Economist weighs in

What's next:

Mount Pleasant said the first phase of the Microsoft construction is expected to be done this year.

Last year, Microsoft also announced it chose the University of Wisconsin-Milwaukee to host its seventh AI Co-Innovation Lab across the entire world. A university spokesperson said that the project is still moving forward, but it's not up and running, yet.

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