Microsoft's cloud computing, particularly Azure, is not growing as expected due to a lack of data centers to meet the increasing demand for AI products. Although Azure AI services experienced a remarkable 157% growth, the overall cloud revenue growth is projected at only 32%. High investments in AI infrastructure are necessary, with plans to spend $80 billion on data centers this fiscal year, yet Wall Street is cautious as competitors emerge and returns on investment are questioned. Commercial bookings grew substantially, indicating potential for future growth despite current limitations.
Microsoft's Azure cloud division's growth is constrained by a shortage of data centre capacity, causing slower-than-expected overall growth despite strong demand for AI services.
While Azure AI services soared by 157%, CFO Amy Hood indicated that overall cloud revenue growth is limited by insufficient data center capacity to meet rising demand.
Despite investing heavily in AI, including $80 billion on data centers this fiscal year, investors are concerned about the returns and competition from newcomers like DeepSeek.
Microsoft's commercial bookings increased by 67%, driven in part by commitments from OpenAI, indicating strong future revenue potential despite current capacity issues.
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