Microsoft has warned that its customers may experience interruptions in artificial intelligence services as increasing demand challenges the company’s ability to expand its data infrastructure quickly. The company’s chief financial officer, Amy Hood, highlighted during the fiscal 2025 third-quarter report that they expect AI capacity could become strained as soon as June. She noted that although Microsoft aimed to balance supply and demand by the close of the fourth quarter, a stronger surge in usage means some limitations might persist into year’s end. This situation arises amid reports of Microsoft scaling back on data center leases over recent months.
Microsoft’s Data Center Strategy and Investment
Earlier this year, the company reportedly withdrew from agreements that would have provided hundreds of megawatts of additional data capacity, a move roughly comparable to losing two new data centers. Additional sources indicate further reductions in data center expansion activities. Despite these adjustments, Microsoft maintains its Microsoft data centers $80 billion data center investment for this year, an amount set in January, with half allocated to facilities within the United States. Hood reminded stakeholders that decisions about building or scaling data centers involve significant lead times, often spanning three to seven years from land acquisition to completion.
Microsoft’s leadership emphasized the necessity of continuously balancing these long term plans with constantly shifting demand. During the same earnings call, company CEO Satya Nadella noted they had launched new data centers across ten countries and four continents in the last quarter. Recent AI service disruptions highlight the impact of delays in Microsoft’s infrastructure ramp-up efforts.
