As more companies incorporate human-like generative artificial intelligence (AI) features into their products following the popularity of OpenAI’s ChatGPT chatbot, Microsoft has revealed that it currently faces an excess in demand for AI infrastructure. In a recent earnings report, CFO Amy Hood confirmed this shortage during a call with analysts, stating that “we do have demand that exceeds our supply by a bit.”
Microsoft is increasing its capital expenditures at the fastest rate since 2016; however, it seems this might not be enough to keep up. While Microsoft’s sales grew by an impressive 17% during the same period, their investments in data center infrastructure have increased even faster – jumping a significant 79%.
The demand for AI infrastructure has placed Microsoft in the same supply challenge faced by major developer of processors for training and deploying generative AI models, Nvidia. As one of its primary customers, this shortage is now affecting Microsoft’s Azure cloud division, which contributes billions to their revenue every quarter while growing faster than most other areas of business within the company.
Hood acknowledged that these constraints had negatively affected recent performance reports, as available capacity for renting AI models has lessened. The current quarter will see an even more substantial increase in capital expenditures with a primary focus on cloud infrastructure to meet this growing demand signal for Microsoft’s cloud and AI products.
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