Microsoft prospects might encounter service disruptions when utilizing AI companies as a result of demand outpacing the corporate’s means to deliver information facilities on-line, an govt warned through the firm’s earnings name
Microsoft’s EVP and CFO Amy Hood mentioned through the firm’s fiscal 2025 third-quarter earnings name Wednesday the corporate might face AI capability constraints as early as June as a result of demand is larger than its information facilities can deal with.
“We had hoped to be in steadiness by the top of This fall however we did see some elevated demand, as you noticed via the quarter,” Hood mentioned. “So we’re going to be somewhat brief, 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 printed 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. Within the two months since, there have been multiple reports of extra information middle lease cancellations.
Microsoft says these two cases usually are not essentially associated. The company reiterated today that it’s nonetheless dedicated to investing $80 billion into information facilities this 12 months — because it initially earmarked at the start of this 12 months. Half of that determine is for U.S.-based information facilities.
Hood additionally added that demand at this time and demand tomorrow usually are not 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, you recognize, lead instances of 5 to seven years, two to a few years,” Hood mentioned. “So we’re continually in a balancing place as we watch demand curves.”
Microsoft CEO Satya Nadella mentioned on the prime of the earnings name the corporate opened information facilities throughout 10 new nations and 4 new continents throughout this previous quarter.