During Microsoft’s revenue call, Microsoft’s revenue call warned that customers could face disruptions in AI services as demand outweighs the company’s ability to provide data centers online.
Microsoft’s EVP and CFO Amy Hood said that in the company’s third quarter revenues, it could face AI capacity constraints as early as June.
“We wanted to balance by the end of the fourth quarter, but as we saw throughout the quarter, we saw an increase in demand,” Hood said. “So when we leave the year, it’s a little shorter and a little tighter.”
The timing of Hood’s statement is interesting as Microsoft reportedly cancelled multiple data center leases this year.
In February, Investment Bank TD Cowen published a memo that Microsoft canceled multiple data center leases, equivalent to “hundreds of megawatts” or two data centers. In the next two months, there are multiple reports on additional data center lease cancellations.
Microsoft says that these two instances are not necessarily related. The company reiterated today that it is still committed to investing $80 billion in data centers this year, as allocated earlier this year. Half of that number is for US-based data centers.
Hood also added that demand today and tomorrow are not the same.
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“Just remind me, these are very long lead time decisions. From land to construction, we can have five to seven years, two to three years,” Hood said. “So we’re always in a balanced position, looking at the curve of demand.”
Microsoft CEO Satya Nadella said at the top of the revenue call, which opened data centers in 10 countries and four new continents this quarter.
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