An government cautioned throughout Microsoft’s earnings name on Wednesday that clients may face AI service disruptions as demand outstrips the corporate’s skill to convey information facilities on-line.
Microsoft’s EVP and CFO Amy Hood stated throughout the firm’s fiscal 2025 third-quarter earnings name that the corporate might face AI capability constraints as early as June.
“We had hoped to be in steadiness by the tip of This fall however we did see some elevated demand, as you noticed by means of the quarter,” Hood stated. “So we’re going to be somewhat quick, somewhat tight as we exit the 12 months.”
The timing of Hood’s assertion is fascinating as a result of Microsoft has reportedly cancelled a number of information middle leases this 12 months.
In February, funding financial institution TD Cowen revealed a memo that Microsoft cancelled a number of information middle leases that equated to a “couple hundred megawatts” or the equal of two information facilities. In the 2 months since, there have been a number of reviews of further information middle lease cancellations.
Microsoft says these two cases are usually not essentially associated. The firm reiterated right this moment that it’s nonetheless dedicated to investing $80 billion into information facilities this 12 months — because it initially earmarked at first of this 12 months. Half of that determine is for U.S.-based information facilities.
Hood additionally added that demand right this moment and demand tomorrow are usually not the identical factor.
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“Just a reminder, these are very lengthy lead time choices, from land to construct out, it may be, you understand, lead instances of 5 to seven years, two to 3 years,” Hood stated. “So we’re always in a balancing place as we watch demand curves.”
Microsoft CEO Satya Nadella stated on the prime of the earnings name that the corporate opened information facilities throughout 10 new nations and 4 new continents throughout this previous quarter.
