Microsoft plans to more than triple its data center capacity, a move expected to help the company alleviate its computing power shortage.
According to regulatory filings submitted by Microsoft on Wednesday, the software giant added over $130 billion in data center leases in a single quarter and plans to expand its global data center capacity from approximately 12 gigawatts to more than 38 gigawatts by 2032, an increase of more than twofold.
As of the end of the quarter ending June 30, the company's total lease commitments not yet commenced reached $329.1 billion, a sharp jump from $196.6 billion in the previous quarter, representing a quarter-over-quarter increase of over 67% — the largest quarterly lease surge in the company's history.
Microsoft stated in the filing that the aforementioned leases are "primarily" for data centers, with some leases "subject to certain contractual conditions." Jonathan Neilson, Microsoft's head of investor relations, said:
This is a true reflection of the persistently strong demand we are seeing, and these leases will serve customer needs for many years to come.
Behind the computing capacity expansion is the capacity bottleneck that Microsoft has long faced. Whether this large-scale expansion can be released in time will directly determine whether Microsoft can maintain its market share in cloud computing and AI businesses.
Capacity Shortages Have Already Led to Customer Loss
Microsoft's large-scale expansion is partly aimed at making up for business losses caused by insufficient capacity in the past.
Due to tight data center supply, Microsoft has imposed restrictions on new cloud service subscriptions in core markets such as the United States and Europe. Reports citing people familiar with the matter said that some customers turned to competitors after being unable to obtain additional capacity in their desired regions from Microsoft.
Microsoft had paused some leasing activity for much of 2025, and this restart and acceleration is interpreted by outsiders as the company regaining confidence in its demand outlook.
Behind the large-scale expansion is continuously rising capital expenditure. Microsoft's capital spending in its most recent fiscal year reached $145 billion, and analysts expect this figure to continue growing in the coming years.
At the same time, Microsoft and its peers must also contend with pressure from the public. Polls show that most Americans oppose building data centers in their local areas, which brings additional obstacles to site selection and approval.
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