Microsoft cloud growth constrained by shortage of data centres
The Azure cloud division will grow at up to 32 per cent in its third quarter, not much faster than during the last three months of 2024
Microsoft said its cloud-computing business will continue to grow slowly in the current quarter, as the company struggles to build enough data centres to handle demand for its artificial intelligence (AI) products.
The firm's Azure cloud division will grow as much as 32 per cent in its fiscal third quarter, not much faster than it did during the last three months of 2024. Microsoft's shares fell about 5 per cent in extending trading.
The Redmond, Washington-based software giant is considered a leader in commercialising AI products, thanks to its close partnership with ChatGPT creator OpenAI. In the last year, Microsoft unleashed a blizzard of Copilot-branded AI assistants, but efforts to monetise these products is taking longer than some investors would prefer.
Microsoft said Azure AI services grew 157 per cent. But overall sales in the key cloud unit are being hurt by the company's lack of enough data centre capacity to meet customer needs, chief financial officer Amy Hood said in an interview. She later told investors that the capacity constraints should lift by the end of the company's financial year.
Microsoft has almost US$300 billion worth of commercial service contracts that the company must provide in the future and has not yet recognised as revenue, she said.
