Microsoft has issued a warning about potential service disruptions in its AI offerings, as demand for artificial intelligence technology continues to surge. During the company’s fiscal 2025 third-quarter earnings call, Executive Vice President and CFO Amy Hood stated that the growing demand for AI services is expected to exceed the current capacity of its data centers, potentially causing disruptions as early as June.
Hood mentioned that Microsoft had hoped to achieve balance by the end of Q4, but due to unexpected high demand, there may be AI capacity shortages as the year ends. She emphasized that this imbalance is temporary and that the company is continuing with its long-term investment plans.
This warning comes amid reports that Microsoft has canceled several data center leases this year. In February, investment bank TD Cowen revealed that Microsoft had canceled leases equivalent to the power of two data centers, approximately "a couple hundred megawatts." Since then, multiple reports have emerged regarding additional lease cancellations.
Despite this, Microsoft clarified that these cancellations are not directly related to the AI capacity issues. The company affirmed that it remains committed to its $80 billion investment in data centers for 2025, with half of this amount dedicated to U.S.-based centers.
Hood also pointed out that current demand levels differ from future projections, noting that data center construction decisions take several years. “From land acquisition to build-out, these processes can take five to seven years, sometimes two to three years,” she said. “We are constantly balancing as we monitor demand curves.”
Microsoft’s CEO, Satya Nadella, added that the company has expanded globally, opening data centers in 10 new countries and four new continents during the past quarter.
