AI Daily: Apple planning to open AI server factory in Texas

TD Cowen says Microsoft cancellation of data center leases part of Open AI shift

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly:

AI SERVER FACTORY: 

As part of its new U.S. investments, Apple (AAPL) will work with manufacturing partners to begin production of servers in Houston later this year. A 250,000-square-foot server manufacturing facility, slated to open in 2026, will create thousands of jobs. Previously manufactured outside the U.S., the servers that will soon be assembled in Houston play a key role in powering Apple Intelligence, and are the foundation of Private Cloud Compute, which combines powerful AI processing with the most advanced security architecture ever deployed at scale for AI cloud computing.

The servers bring together years of R&D by Apple engineers, and deliver the industry-leading security and performance of Apple silicon to the data center. Teams at Apple designed the servers to be incredibly energy efficient, reducing the energy demands of Apple data centers – which already run on 100 percent renewable energy. As Apple brings Apple Intelligence to customers across the U.S., it also plans to continue expanding data center capacity in North Carolina, Iowa, Oregon, Arizona, and Nevada.

AI DATA CENTERS: 

TD Cowen highlighted in a research note on Friday that recent channel checks point to the cancellation of hyperscale data center leases at Microsoft (MSFT) that are specifically tied to supply chain and/or power delivery delays, which in turn is driving facility delivery delays relative to original ready for service dates. Conversely, recent channel checks also indicate that Microsoft is active in the data center market with incremental requirements in markets where it has existing availability zones, the firm tells investors. 

Third-party hyperscale data center demand has increased year-over-year, which is supported by both the firm’s top-down demand pipeline and bottom-up hyperscale data center activity checks, says TD Cowen, which views the Microsoft pullback as part of the mix shift in incremental OpenAI workloads from Microsoft to Oracle (ORCL). In addition to Oracle seeing a material ramp in year-over-year demand, so are Alphabet (GOOGL) and Meta (META), while Amazon (AMZN) demand remains consistent year-over-year, the firm tells investors in a note about the cloud hyperscalers.

MOVING TO THE SIDELINES: 

Daiwa downgraded Quanta Services (PWR). The firm sees headwinds on the company’s renewable energy infrastructure order growth and U.S. artificial intelligence-driven power infrastructure spending, on top of a lack of positive catalysts ahead for the stock. Quanta’s 2025 guidance is “unappealing,” Daiwa tells investors in a research note.

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Originally Posted February 24, 2025 – AI Daily: Apple planning to open AI server factory in Texas