European AI-related stocks declined for a second consecutive day on Tuesday, as concerns over Microsoft's data centre expansion dampened investor sentiment.

A recent analyst note suggested Microsoft had cancelled major US data centre leases, raising questions about its AI and cloud investment strategy. The uncertainty comes ahead of Nvidia's upcoming earnings report, which is expected to provide insight into the strength of AI demand.

Companies exposed to data centres and infrastructure saw significant losses, with Germany's Siemens Energy and France's Schneider Electric continuing their declines from Monday.

Italian cable manufacturer Prysmian and Swiss engineering firm ABB also suffered losses as analysts debated whether Microsoft's actions signalled a broader trend or a temporary reassessment. Microsoft has maintained that its AI and cloud expansion plans remain unchanged.

Market analysts remain divided, with some viewing the selloff as an overreaction and a potential buying opportunity. The volatility follows last month's global tech downturn triggered by China's low-cost AI model, DeepSeek.

Nvidia's earnings on Wednesday will be closely watched as investors assess whether AI-related stocks can sustain their high valuations in the face of shifting market dynamics.