TMTPOST --   Microsoft   Corp.   has to   take   more time to address the   datacenter   crunch   as the supply situation   is   tougher than it   expected before, according to   a report   on Thursday.

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Many of Microsoft ’ s data center regions in   the   United States   are facing   shortages of physical space or servers, Bloomberg cited   people with knowledge   of the   company ’ s internal   forecasts. In   crucial   datacenter   hubs like   Northern Virginia and Texas, new Microsoft   Azure cloud service subscriptions are reported to remain   restricted   through the first half of 2026.

This timeline extends beyond what Microsoft had publicly stated. Chief Financial Officer ( CFO )   Amy Hood in an   earnings   call in   July had indicated that current constraints would last through the end of 2025.   Hood said that continual supply shortages were due to increasing demand. "I talked about it — my gosh — in January and said I thought we ’ d be in better supply-demand shape by June," she told analystsl. "And now I ’ m saying — I hope I ’ m in better shape by December."

The capacity restrictions reportedly   affect both graphics processing unit ( GPU ) -powered machines typically used for artificial intelligence ( AI )   workloads and traditional central processing unit ( CPU ) -dominated data centers that handle standard cloud services.  

The report noted negative knock-on   effect of   individual datacenters. Microsoft salesmen   typically refer to customers to other facilities with capacity   if   they find their preferred facility   runs   out of space,   but   things could   get worse   as these workarounds can increase complexity and the time it takes for data to travel between server farms and customers.

A Microsoft spokesperson   said most of Azure   services and regions in the U.S. have available capacity so that existing customers can continue to grow their deployed workloads.   In the event of certain unplanned surges in demand, the company will introduce a "capacity preservation methods" to balance customer demand across its data center fleet, said the   spokesperson.

The report   came on the heels of announcement that   Microsoft   decided to drop its   plans for   building a datacenter   in Caledonia,   Wisconsin. The decision   was made on   opposition   from   local residents and elected officials. "Based on the community feedback we heard, we have chosen not to move forward with this site," Microsoft said in   a statement on Wednesday.

"We remain committed to investing in Southeast Wisconsin and look forward to working with the Village of Caledonia and Racine County leaders to identify a site that aligns with community priorities and our long-term development goals," according to the statement.

The Caledonia data center was planning to serve   as a   backup   for Microsoft ’ s AI operations in Mount Pleasant.   The   company on September   18 said that it would more than double its data center complex in Mount Pleasant, spending another $4 billion on what the company calls a state of the art AI facility.   The new phase was announced as work is close to wrapping up on the first part of the complex, a $3.3 billion data center that is expected to come online in 2026.   The second datacenter was planned to be online in 2028.

Microsoft   in late   July   disclosed strong results across the board for fourth   fiscal quarter ended June   30, 2025.   CEO Satya Nadella   said   Azure   surpassed $75 billion   in   revenue   this fiscal   year, up 34%   YoY. That   was   the first time for   Microsoft   to disclose Azure revenue.  

Microsoft executives have indicated that the company   will match increases in demand for AI services by building up its data centers. Nadella   on an earnings   call said Microsoft now has more than 400 data centers across 70 regions worldwide.   The   company anticipated more than $30 billion in capital expenditure ( Capex )   for the   current quarter, or the   first quarter   of   this fiscal   year,   said   CFO   Hood.   That   forecast   marks a   new record high   for Capex   with   an   quarter-over-quarter   rise of more than 24%.