Microsoft customers may experience disruptions or service slowdowns when using artificial intelligence products due to surging demand outstripping the company’s ability to activate new data centers, a senior executive cautioned during a recent earnings call.
Amy Hood, Microsoft’s Executive Vice President and Chief Financial Officer, indicated during the company’s fiscal 2025 third-quarter earnings call that the company could encounter capacity constraints in its AI infrastructure as soon as June. “We had hoped to achieve a balance by the end of the fourth quarter, but we continued to experience rising demand throughout this period,” Hood explained. “Consequently, we anticipate being somewhat constrained as we close out the year.”
These remarks come amid reports earlier in the year that Microsoft had canceled several data center lease agreements. A research note from investment bank TD Cowen in February indicated that Microsoft opted out of multiple leases, equivalent to hundreds of megawatts of potential capacity—roughly equivalent to two large data centers. Further reports in subsequent months detailed additional data center project cancellations.
However, Microsoft maintains these cancellations were unrelated to current constraints. Reiterating its commitment, the company said it remains on track to fulfill an $80 billion investment toward expanding its data center infrastructure in fiscal 2025, with half of that earmarked specifically for U.S.-based facilities.
Hood also emphasized that the challenge of balancing immediate customer demand with long-term infrastructure planning is ongoing. “These are decisions made years in advance,” she noted. “From land acquisition to a fully operational data center, the timeline can span anywhere from two to seven years. Thus, managing the timing and alignment with projected demand is always a complex task.”
CEO Satya Nadella highlighted the company’s steady expansion in infrastructure capabilities, noting that Microsoft had opened new data centers across ten countries spanning four continents within the past quarter alone.
