Microsoft says its data centers can last 25 years, extending facility useful life, and reported Azure revenue for the first time alongside lower capex.
Microsoft believes its data centers can last for up to 25 years.
The company revealed on its Q1 2027 earnings call that it is extending the expected useful life of office buildings and data centers in its estate from 15 to 25 years. CFO Amy Hood said this reflected Microsoft's "operating history and expected use of these assets."
It is thought Microsoft currently has access to some 12GW of data center capacity.
CEO Satya Nadella told investors on the call that his firm continues "to get more from the infrastructure we already have by optimizing across the data center design, silicon systems, software, and models."
He added: "For example, we increased the throughput for Copilot workloads by over 50 percent quarter-over-quarter. We continue to scale our fleet with the latest innovations from Nvidia, AMD, alongside our own Maia systems."
Research from the Uptime Institute, published in 2024, found that data centers typically operate for 10 to 15 years, with the average lifespan of a data center sitting at 11.3 years.
Extending the useful life of data centers is also a handy accounting move for Microsoft, as it can spread the cost of multi-billion-dollar facilities over a longer period.
The quarter saw Microsoft disclose the revenue of its Azure cloud platform for the first time. Azure generated $33.2 billion in revenue in the last quarter, a 48 percent year-on-year (YoY) increase, meaning it was responsible for 36 percent of the company's revenue in the three months to the end of September.
During the period, Microsoft brought 24 new data centers online. The company also reported lower-than-expected capex because a number of deals with neoclouds have been delayed.
Microsoft's Agents and Infra division, which includes its Azure cloud platform and AI tools, made $76.8 billion, up 25 percent YoY. Microsoft introduced Agents and Infra as a business segment in its reporting in September as part of a move toward "full transparency of quarterly revenue across each of our key businesses."
Nadella said: "We are building against a growing book of business with a fungible fleet that allows us to dynamically allocate capacity to the highest value opportunities across compute, data, Foundry [its AI developer platform], and [AI assistant] Copilot.
"Accelerating demand led to us adding 24 new data centers across five continents this quarter. We are bringing capacity online faster, reducing dock-to-live times by about 20 percent quarter-over-quarter for new GB300s in our biggest regions, which make up the majority of the GPU deployments."
Microsoft's capex for the quarter was $45.2 billion, lower than the expected $50.7 billion. The company said this was the result of some of the companies it works with for AI cloud services failing to provide data center capacity on time. As a result, Microsoft is estimating annual capex for 2027 at $170 billion, down from its previous estimate of $175 billion.
The company has signed deals with a wide range of neoclouds, including CoreWeave, Nscale, Lambda, Iren, and Nebius.