In its earnings report on Thursday, Microsoft said capital expenditures jumped 79% from a year earlier to $14 billion. The company is spending much fa

Microsoft says cloud AI demand is exceeding supply even after 79% surge in capital spending

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2024-04-26 13:30:08

In its earnings report on Thursday, Microsoft said capital expenditures jumped 79% from a year earlier to $14 billion. The company is spending much faster than it's increasing revenue — sales climbed 17% in the period.

Even with all that investment, Microsoft has a shortage of data center infrastructure, specifically for deploying artificial intelligence models.

"We do have demand that exceeds our supply by a bit," Microsoft Chief Financial Officer Amy Hood told analysts on the company's earnings call.

Companies need an ever-increasing amount of computing power to run hefty workloads, adding human-like generative AI features to their products. It's a boom that was kicked off by OpenAI and its ChatGPT chatbot, and Microsoft has followed suit, adding assistants to the Teams communication app, Bing search engine and other services. The technology can summarize meeting transcripts, compose emails, and explain information from the web.

Nvidia , the biggest developer of processors for training and deploying generative AI models, has been supply-constrained, with revenue more than tripling in consecutive quarters. Now Microsoft, one of Nvidia's major customers, is feeling the stress.