Microsoft Corp. is facing a prolonged data center capacity crunch, a challenge that is expected to persist longer than previously communicated, underscoring the company's difficulties in keeping pace with the surging demand for its cloud services. Internal forecasts indicate that many of Microsoft’s U.S. data center regions are experiencing shortages of both physical space and servers. Specifically, new subscriptions for Azure cloud services are restricted in critical server-farm hubs, including Northern Virginia and Texas, through the first half of next year. This extends beyond the company's prior guidance, as Chief Financial Officer Amy Hood had stated in July that constraints would last through the end of 2025.

The capacity limitations affect a broad spectrum of infrastructure, impacting machines running graphics processing units (GPUs), which are crucial for artificial intelligence workloads, as well as data centers dominated by central processing units (CPUs) that serve as the foundation for traditional cloud services. Azure, Microsoft's primary growth engine, generated over $75 billion in the 2025 fiscal year and has consistently outpaced competitors like Amazon.com Inc. and Alphabet Inc.’s Google in expansion. However, the inability to meet customer cloud demand has been a recurring issue for Microsoft, acknowledged in its last six quarterly earnings calls, a challenge also faced by its rivals.

In response to the shortages, a Microsoft spokesperson stated that a majority of Azure services and regions in the U.S. still have available capacity for existing customers. However, in instances of unplanned demand spikes, the company implements