Microsoft is reportedly preparing for a major expansion of its global data center network, aiming to increase its total capacity from about 12 gigawatts to over 38 gigawatts by 2032. This includes both facilities Microsoft owns and those it leases, but it excludes computing power it rents from other cloud service providers. The company also plans to significantly boost the portion of its data center capacity dedicated to artificial intelligence, raising it from 2 gigawatts today to approximately 12.7 gigawatts by 2032. This expansion reflects Microsoft’s growing focus on AI, which requires vast amounts of computing power. To support this growth, Microsoft spent 145 billion dollars on investments during its fiscal year 2026 and plans to spend an additional 50 billion dollars in the first quarter of the 2027 fiscal year. The company is also working to extend the length of its data center leases from 15 to 25 years, which would help spread out the financial burden of expansion over a longer period. These efforts are part of a broader strategy to ensure Microsoft can meet the rising demand for its cloud services and AI capabilities. However, the company has faced challenges due to a capacity shortage. In early 2025, Microsoft’s chief financial officer, Amy Hood, suspended some construction projects, which later led to capacity issues for several cloud services. Some businesses affected by these limitations turned to competitors. For example, the Chinese e-commerce platform Temu signed a major contract with Oracle instead of using Microsoft’s Azure cloud services, while GitHub rented servers from Amazon Web Services (AWS) after an outage. Even Xbox Cloud Gaming introduced limits on usage hours to prevent its system from becoming overloaded. According to Bloomberg, Microsoft, along with Google, Amazon, and Meta, plans to invest a total of 2,400 billion dollars in data center infrastructure and equipment over the coming years. This surge in investment is driven by the rapid growth of generative AI services, which require immense computing resources. Microsoft’s biggest challenge, Bloomberg notes, will be building and commissioning enough data centers quickly enough to keep up with the demand. Some of the current capacity was originally designed to support increased demand from remote work during the pandemic, showing how difficult it is to predict the pace of technological and market changes.