Microsoft Reportedly Looks to Cut Reliance on Some Neocloud Partners, Plans to Prioritize Its Own Data Centers

Microsoft Corp. MSFT is reportedly scaling back its reliance on third-party AI cloud providers, putting its own data centers first in a move that raises fresh questions for the debt-heavy neocloud sector.

Microsoft is still evaluating which neoclouds to drop, CNBC reported on Friday, citing two people familiar with the matter.

Neoclouds are specialized cloud service providers that rent out graphics processing units (GPUs), the chips powering AI workloads.

Microsoft wants to prioritize its own data center footprint. Two people said Microsoft opted not to renew a deal with Oracle Corp. ORCL, according to the report.

Microsoft did not immediately respond to Benzinga’s request for comment.

Neocloud Stocks Under Strain

Shares of CoreWeave Inc. CRWV, Nebius Group N.V. NBIS and IREN Ltd. IREN are each down roughly 45% over the past month, even after rallying Friday. Rising rates have fueled fears that the firms rely too heavily on debt.

Concerns about data center expansion also grew after a…