Microsoft MSFT shares fell about 3.2% on Monday after a Guardian investigation raised questions about whether the company has enough advanced chips installed to support its rapid artificial intelligence infrastructure expansion.
The report pointed to a potential gap between Microsoft’s stated data-center expansion and the number of AI chips installed across its facilities.
Microsoft disputed the calculations, saying the estimates were based on incorrect assumptions.
The concerns come shortly after JPMorgan raised its price target on Microsoft, citing stronger growth prospects for Azure and Microsoft 365 Commercial Cloud as AI infrastructure spending accelerates.
Microsoft faces questions over AI chip capacity
The Guardian reported that Microsoft had 2.2 million AI chips installed in its global data centers, based on internal documents reviewed by the publication.
That compares with an earlier target of 1.8 million chips by the end of 2024. The report said the figure was lower than some estimates based on Microsoft’s stated data-center capacity.
Microsoft has said it added 5 gigawatts of data-center capacity over the past two years as part of its AI buildout and now operates hundreds of data centers across five continents.
However, estimating the number of operational facilities and AI chips remains difficult because the company reports capacity largely in terms of power rather than individual chips.
Shaolei Ren, a professor at the University of California, Riverside, questioned whether Microsoft’s reported capacity figures provide enough context. “They are giving insufficient context,” Ren said, while noting that Microsoft’s audited sustainability reports provide another measure of its infrastructure.
Microsoft rejected the Guardian’s calculations, saying they drew “the wrong conclusions from incorrect assumptions.” The company also said it does not disclose the volume of specific chips used in its AI infrastructure.
JPMorgan sees stronger AI-driven growth
The concerns over chip availability contrast with JPMorgan’s more bullish view of Microsoft’s AI business.
The bank raised its December 2027 price target to $625 from $550 and maintained an Overweight rating.
Analyst Samik Chatterjee said the company could see accelerating growth in Azure and Microsoft 365 Commercial Cloud, with AI infrastructure investment serving as a key driver.
Chatterjee also pointed to Microsoft’s Copilot products as an important source of potential revenue growth.
He estimated that stronger Copilot adoption could generate between $24 billion and $41 billion in additional revenue, before potential monetization through AI credit sales.
Microsoft’s AI infrastructure spending has also helped support Azure, with Chatterjee highlighting what he described as consistent execution and recent acceleration in the business.
Power constraints add to AI infrastructure challenge
The Guardian report suggested that the issue may not necessarily be a shortage of chips.
Microsoft CEO Satya Nadella previously said the company could have chips sitting in inventory that could not be used because of a lack of completed data-center facilities and available electricity. “It’s not a supply issue of chips,” Nadella said.
The report also highlighted Microsoft’s Fairwater data-center project in Wisconsin and Georgia, saying parts of the development appeared to remain unfinished despite earlier comments that the Wisconsin facility was going live.
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