Satellite images reveal trouble brewing at Microsoft's AI data center partners

Microsoft chief financial officer Amy Hood. Elaine Thompson/AP 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.Have a tip? Contact this reporter via email at gweiss@businessinsider.com or Signal at @geoffweiss.25. Use a personal email address, a non-work WiFi network, and a non-work device; here's our guide to sharing information securely. Read next Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Geoff Weiss is a senior reporter on Business Insider’s tech team, where he covers Nvidia and AI infrastructure. His reporting focuses on the business of AI compute, emerging startups, and the people and strategies shaping the industry.Previously, Geoff was on the media desk, covering YouTube and Netflix, and themes like the intersection of Hollywood and the creator economy. His work on Netflix’s video podcasting ambitions and Mr Beast’s lessons for Hollywood won second and first prize, respectively, at the 2025 LA Press Club Awards.Prior to joining Business Insider, Geoff was the senior editor of Tubefilter and a staff writer at Entrepreneur. He graduated from New York University with a degree in English Literature.He can be reached at gweiss@businessinsider.com, on Signal @geoffweiss.25, and on LinkedIn. Have a tip? Use a personal email address and a nonwork device; here's our guide to sharing information securely. Microsoft Cloud Computing Data Centers More Investing Artificial Intelligence Infrastructure Big Tech Tech AI