Microsoft (NASDAQ: MSFT) shares fell approximately 3.2% on Monday following a Guardian investigation that raised questions about whether the company has enough advanced chips installed to support its rapid artificial intelligence infrastructure expansion. The report highlighted a potential discrepancy between Microsoft's stated data-center expansion and the number of AI chips actually deployed across its facilities.
According to the Guardian, internal documents reviewed by the publication indicated that Microsoft had 2.2 million AI chips installed in its global data centers. This figure compares with an earlier target of 1.8 million chips by the end of 2024. However, the report suggested that this number was lower than some estimates based on Microsoft's publicly 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. Yet, estimating the number of operational facilities and AI chips remains challenging because the company reports capacity largely in terms of power rather than individual chips. Shaolei Ren, a professor at the University of California, Riverside, noted that Microsoft's reported capacity figures provide insufficient context, though he acknowledged that the company's audited sustainability reports offer another measure of its infrastructure.
Microsoft rejected the Guardian's calculations, stating that 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. This is not the first time Microsoft has faced scrutiny over its AI infrastructure. CEO Satya Nadella previously acknowledged that the company could have chips sitting in inventory that cannot be used due to 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 projects in Wisconsin and Georgia, noting that parts of the development appeared to remain unfinished despite earlier comments that the Wisconsin facility was going live. These concerns come amid broader investor focus on the heavy capital expenditures required for AI infrastructure, as seen in recent market reactions.
Despite these concerns, JPMorgan maintains a bullish outlook on Microsoft. The bank raised its December 2027 price target to $625 from $550 and kept an Overweight rating. Analyst Samik Chatterjee cited accelerating growth prospects for Azure and Microsoft 365 Commercial Cloud, driven by AI infrastructure spending. He also pointed to Microsoft's Copilot products as a significant potential revenue source, estimating that stronger Copilot adoption could generate between $24 billion and $41 billion in additional revenue before potential monetization through AI credit sales.
Chatterjee highlighted consistent execution and recent acceleration in Azure's business, which has been supported by Microsoft's AI infrastructure investments. The company's AI efforts have also had broader market implications, as seen in positive reactions from chipmakers following strong Azure results.
Investors are weighing these mixed signals: the potential for strong AI-driven growth versus the challenges of scaling infrastructure. The stock's decline on Monday reflects the market's sensitivity to any signs of execution risk in Microsoft's AI buildout. As the company continues to invest heavily in data centers and AI capabilities, transparency around chip deployment and infrastructure readiness will likely remain a key focus for investors.
This article is for informational purposes only and does not constitute financial advice.
