Microsoft expects some AI capacity constraints this quarter

An executive cautioned during Microsoft’s earnings call on Wednesday that customers might face AI service disruptions as demand outstrips the company’s ability to bring data centers online. Microsoft’s EVP and CFO Amy Hood said during the company’s fiscal 2025 third-quarter earnings call that the company may face AI capacity constraints as early as June. “We had hoped to be in balance by the end of Q4 but we did see some increased demand, as you saw through the quarter,” Hood said. “So we are going to be a little short, a little tight as we exit the year.” The timing of Hood’s statement is interesting because Microsoft has reportedly cancelled multiple data center leases this year. In February, investment bank TD Cowen published a memo that Microsoft cancelled multiple data center leases that equated to a “couple hundred megawatts” or the equivalent of two data centers. In the two months since, there have been multiple reports of additional data center lease cancellations. Microso ... Read full article.