Microsoft Reportedly Plans to Triple Data Center Capacity to 38 Gigawatts by 2032

Microsoft Corp. plans to expand its data-center capacity to approximately 38 gigawatts by 2032, a move that would more than triple its current global footprint, Bloomberg News reported Thursday, citing people familiar with the matter. The aggressive build-out underscores the immense infrastructure investment required to power the next wave of artificial intelligence services.

The AI Arms Race

The expansion is primarily driven by the voracious computing demands of generative AI applications like OpenAI's ChatGPT and Microsoft's own Copilot services. Technology companies are pouring billions of dollars into data centers to secure a competitive edge in the rapidly growing AI market.

According to the report, Microsoft's current capacity stands at about 12 gigawatts. Of that, only about 2 gigawatts are reportedly dedicated to specialized AI chips. The company's long-term plan anticipates that AI-specific hardware will account for roughly one-third of its future 38-gigawatt capacity.

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Financial Strategy and Market Impact

Such a large-scale expansion involves significant capital expenditures. To manage the financial reporting of these costs, Microsoft is reportedly planning to extend its long-term leases on data centers to 25 years, up from the previous standard of 15 years. This accounting change has the effect of lowering the company's annually reported capital expenditures.

For investors, the heavy spending on infrastructure has been a key focus. However, Microsoft's forecast in July for stronger-than-expected cloud growth helped reassure the market that its massive AI investments are beginning to translate into revenue, easing concerns that spending could outpace demand. Microsoft did not immediately respond to a Reuters request for comment on the Bloomberg report.