Episode summary
Microsoft Forecasts Show Data Center Crunch Persisting Into 2026 | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney, Scarlet Fu · Guests: Anurag Rana, Steve Man, Lindsay Dutch
Summary
Microsoft’s warning that data-center capacity will stay tight into 2026 was framed as another sign that the AI buildout is still running into physical bottlenecks. An analyst said Microsoft had already flagged some of this pressure a year earlier, then briefly suggested conditions were easing, but the latest update points to a longer crunch that could lift capex, pressure cloud margins and keep demand strong for third-party infrastructure providers such as CoreWeave, Nebius and Oracle. The analyst argued the AI infrastructure cycle is still early because data centers take years to permit, power and build.
The discussion then turned to autos, where Stellantis was described as especially exposed to President Donald Trump’s proposed 25% tariffs on medium- and heavy-duty trucks because of its reliance on Mexican-built Ram models. An analyst said some production can be shifted quickly where U.S. capacity already exists, but a broader reshoring of North American auto supply chains would take years, if not decades. GM, Ford and Hyundai were cited as already making moves to reallocate production.
On consumer hardlines, the outlook was more constructive. An analyst said Dick’s Sporting Goods and Ulta Beauty are seeing solid first-half demand and could land toward the middle-to-upper end of their guidance ranges if demand holds into the holiday season and into 2026. The key theme was that consumers remain selective and value-focused, but still spend on newness, exclusives and premium products.
Key takeaways
- Microsoft’s data-center shortage could persist into 2026, which an analyst said may lift capex and pressure cloud growth and margins.
- The AI infrastructure buildout still looks early, with the analyst arguing data-center projects take years to permit, power and complete.
- Stellantis was described as more tariff-sensitive than Ford or GM because of its Mexican-built Ram exposure.
- The analyst said broad reshoring in autos is a multi-year or even multi-decade process, despite some quick production shifts already underway.
- Dick’s Sporting Goods and Ulta Beauty were said to have solid demand trends, helped by consumer appetite for newness, exclusives and premium items.
Notable quotes
“Microsoft saying, "Hey, we're not going to have as much u I guess uh data center capacity as we thought”
“We think capex could go up. We think cloud realization of the rates could go down”
“I do not see any reason why in five to seven years we'll still not be talking about this topic”
“I think they are very sensitive um to to tariffs”
“we might be able to trend sort of towards the middle upper half of the range if that demand can hang on through the second half into 2026”
How the episode opens
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Uh, speaking of technology, uh, piece of news out I thought was really interesting, Scarlet. Microsoft saying, "Hey, we're not going to have as much u I guess uh data center capacity as we thought and we're not going to have as much as we need until maybe sometime next year." It's just another data point that as Jay was just pointing out, there's lots of ways to play AI. Money's being spent all throughout
The economy, not just the tech stack, — But there's still log jams nonetheless. — Yeah, still log jams nonetheless. So, let's see what's going on with our good friends at Microsoft. Honor Rana joins us, technology analyst uh for Bloomberg Intelligence. Uh again, what do you make of this Microsoft news honor that they say, you know, data center crunch is going to persist into 2026?
Yeah, you know, Microsoft talked about a little bit of this uh in the earnings call about, let's say, 12 months ago. Then they said things are easing or things are improving and it does have an impact on their cloud business growth rate when things are tight. Now this news I think it was an excellent article written by Bloomberg News and you know it gives us a lot of things to think about as to what's going to happen over the next 12 to 18 months.
We think capex could go up. We think cloud realization of the rates could go down and uh you know the AI boom is going to continue or the AI infrastructure boom is going to continue because if Microsoft needs more capacity it's going to go to people like Cororeweave, Nebas, Oracle.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- microsoft data center capacity
- us data center shortages
- auto tariffs
- automaker reshoring
- retail sales outlook
Companies and tickers mentioned
- MSFT
- STLA
- F
- GM
- DKS
- ULTA
- Microsoft
- Stellantis
- Ford
- General Motors
- Dick's Sporting Goods
- Ulta Beauty
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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