An govt cautioned throughout Microsoft’s earnings name on Wednesday that clients may face AI service disruptions as demand outstrips the corporate’s potential to convey knowledge facilities on-line.
Microsoft’s EVP and CFO Amy Hood mentioned through the firm’s fiscal 2025 third-quarter earnings name that the corporate could face AI capability constraints as early as June.
“We had hoped to be in stability by the tip of This autumn however we did see some elevated demand, as you noticed by way of the quarter,” Hood mentioned. “So we’re going to be a bit of brief, a bit of tight as we exit the yr.”
The timing of Hood’s assertion is fascinating as a result of Microsoft has reportedly cancelled a number of knowledge middle leases this yr.
In February, funding financial institution TD Cowen revealed a memo that Microsoft cancelled a number of knowledge middle leases that equated to a “couple hundred megawatts” or the equal of two knowledge facilities. Within the two months since, there have been a number of experiences of further knowledge middle lease cancellations.
Microsoft says these two cases aren’t essentially associated. The firm reiterated in the present day that it’s nonetheless dedicated to investing $80 billion into knowledge facilities this yr — because it initially earmarked in the beginning of this yr. Half of that determine is for U.S.-based knowledge facilities.
Hood additionally added that demand in the present day and demand tomorrow aren’t the identical factor.
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“Only a reminder, these are very lengthy lead time selections, from land to construct out, it may be, , lead occasions of 5 to seven years, two to 3 years,” Hood mentioned. “So we’re continuously in a balancing place as we watch demand curves.”
Microsoft CEO Satya Nadella mentioned on the high of the earnings name that the corporate opened knowledge facilities throughout 10 new nations and 4 new continents throughout this previous quarter.
