Big news in the artificial intelligence (AI) space over the weekend is shaking up stock prices at AI app-maker C3.ai (AI -4.53%) and small modular nuclear power plant-builder NuScale Power (SMR -2.78%) this morning, with C3.ai stock down 6.4% through 10:20 a.m. ET, and NuScale off 6.2%. At the same time, tech giant Oracle (ORCL 1.02%) is bouncing all around. Up nearly 4% earlier in the day, it's currently in the red, down 0.2%.

And I think you can blame investment bank TD Cowen for all of this.

TD Cowen's bombshell AI news

In a report over the weekend, analysts from TD Cowen noted that Microsoft (MSFT -1.07%), an early investor in AI and in OpenAI in particular, has recently canceled "a couple of hundred MWs" worth of data center leases in the United States, and has "pulled back" on projects that would have resulted in further new data center leases.

Cowen notes that Microsoft is citing construction delays and lack of access to power as excuses for trying to get out of its leases. Also, Microsoft seems to be particularly reluctant to enter into new data center leases outside the U.S., add the analysts.

And why is this important? "Microsoft was the most active lessee of capacity in 2023 and 1H24, at which time it was procuring capacity [to service] OpenAI workloads," says TD, and had announced plans to invest $80 billion in data centers in 2025. But Microsoft also appears to be having second thoughts about how many data centers it really needs, and "the company may have excess data center capacity relative to its new forecast."

Bigger picture, Microsoft CEO Satya Nadella predicted in an interview last week that AI infrastructure appears to be on a path toward overcapacity, which may be why Microsoft adopted a strategy of entering into leases of data centers, rather than owning them outright (because a lease is temporary, and can be abandoned once no longer needed).

What all this means for C3, NuScale, and Oracle

The strange thing is that Microsoft already seems to be thinking it may not need all the data center capacity that it thought it did need as early as last month. That would explain why NuScale stock is declining, for example.

If there's less need for data centers, then there will be less need for nuclear energy to power them -- Microsoft's excuses about lacking access to sufficient power notwithstanding. (In fact, if lack of power were the real reason Microsoft is backing out of leases, you'd think that would be bullish for NuScale's business.)

A decline in Microsoft's interest in AI and data centers would also explain weakness in C3.ai's stock price today. If Microsoft is becoming less enthusiastic about growth in demand for AI services, that would be bearish for C3.

Where I think investors might be getting things wrong, though, is on Oracle, which as you'll recall is taking on a big role in President Donald Trump's $500 billion Stargate AI project, in alliance with Japan's Softbank and OpenAI. On the one hand, yes, decreased optimism from Microsoft about AI demand might imply bad things for Oracle. On the other hand, though, if part of the reason Microsoft is easing up on the gas in AI is because Oracle will be providing data center services to OpenAI going forward, lessening demand for Microsoft to provide these services, and therefore lessening Microsoft's need for data centers... well, that would make a lot of sense.

It wouldn't be bad news for Oracle at all. It wouldn't even be "new" news for Oracle, but rather just the logical consequence of Oracle's own news.

Don't get me wrong. I'm not super optimistic about Oracle stock in any case, not at its present valuation of 41 times earnings and nearly 9 times trailing sales. Those numbers alone might be a good reason to sell some Oracle stock. I just don't think TD Cowen's report adds a second reason to sell Oracle.