After Microsoft paused some development of data centers in spring 2025, the company was surprised to see the demand for artificial intelligence services race past its ability to provide them, Bloomberg reported Wednesday (April 1).
At the time Microsoft made that decision, it was spending more per quarter than it used to spend per year, due to the cost of chips and data centers, according to the report.
Today, as demand for AI services continues to surge, the company is facing a shortage of data center space that is restraining its business. For example, Microsoft has restricted new subscriptions for cloud services in some locations, the report said.
The company is now adding capacity by buying existing data center projects, turning to smaller cloud providers such as CoreWeave and Nscale, and holding weekly meetings to distribute computing power among its own business units, per the report.
Some of Microsoft’s rivals slowed their development of data centers when it did, due to similar concerns about the accuracy of predictions of demand for AI, as it remains an emerging technology, according to the report.
We’d love to be your preferred source for news.
Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!
Other companies such as Meta, Google and Amazon recently said they plan to spend tens of billions of dollars more this year than they expected to meet the demand for AI, the report said.
Advertisement: Scroll to Continue
At the same time, there are still concerns about a potential AI bubble, per the report.
PYMNTS reported March 24 that AI companies are now managing consumer demand rationing via usage limits. For example, users of Anthropic’s AI assistant Claude, regularly receive a message that their daily limit has been reached and must wait for it to be reset.
Anthropic has acknowledged that it is constrained by computing resources, a condition that applies broadly across AI model providers racing to bring new data centers online.
It was reported March 17 that Amazon CEO Andy Jassy said that the growth of AI could drive the sales of the company’s cloud computing unit Amazon Web Services (AWS) to a level double that he previously expected. AWS’ sales grew 19% year over year in 2025 to reach $128.7 billion.
For all PYMNTS AI coverage, subscribe to the daily AIÂ Newsletter.