Microsoft targets 38-gigawatt global data centre network by 2032.

Microsoft Corporation (NASDAQ: MSFT) is planning to expand its global data center capacity from roughly 12 gigawatts to more than 38 gigawatts by 2032, more than tripling its current infrastructure footprint. Bloomberg News reported these figures based on people familiar with Microsoft's internal plans, though the company has not confirmed the target in any public filing or statement.

Of Microsoft's current 12-gigawatt capacity, only about 2 gigawatts is dedicated to AI-specific chips. The company expects this share to grow to roughly one-third of the larger 38-gigawatt total by 2032.

The bull case for the expansion rests heavily on Azure's accelerating growth. Azure and other cloud services revenue climbed 43 percent year over year in fiscal Q4. Microsoft Cloud revenue reached $59.3 billion for the quarter and $214.4 billion for fiscal 2026, underscoring the scale of demand the company is working to serve. Microsoft has also acknowledged that capacity constraints have limited its ability to satisfy existing demand, meaning new infrastructure could unlock additional business that current data centers cannot support.

The company's commercial remaining performance obligations rose 84 percent year over year to $678 billion, with roughly 30 percent of that amount expected to be recognized as revenue within the next 12 months. Microsoft added another gigawatt of capacity in fiscal Q4 and remains on track to roughly double its overall capacity within two years, demonstrating its execution pace.

To secure long-term power supply for the expanding network, Microsoft signed a 20-year agreement with Constellation Energy tied to the restart of the 835-megawatt Three Mile Island Unit 1.

On the bear side, capital requirements are staggering. Microsoft is expecting more than $50 billion of capital expenditures in fiscal Q1 2027 and approximately $175 billion during calendar 2026 under its broader capex definition, which includes finance leases. The company reported roughly $145 billion of capital expenditures in fiscal 2026, while cash additions to property and equipment totaled about $116 billion, reflecting the enormous financial burden of its infrastructure ambitions.

Political and regulatory resistance adds further risk. Texas temporarily halted approvals for new data center grid connections, and New York imposed a moratorium on large new data centers over electricity and water concerns.

The 38-gigawatt figure itself remains an internal roadmap rather than formal guidance. Reuters noted that Microsoft did not immediately comment when asked about the reported target. Multi-year construction timelines, shifting customer demand, and improvements in computing efficiency could all alter how much physical capacity Microsoft ultimately needs to build by 2032.

Hedge fund sentiment showed a slight softening, with Microsoft's holder count slipping to 273 in the second quarter from 282 in the first, even as position value rose to $66.51 billion from $63.58 billion, according to Insider Monkey's database. By comparison, Alphabet saw stronger institutional conviction over the same period, with holders climbing to 275 from 265 and position value jumping to $93.74 billion from $72.41 billion.

Azure's 43 percent growth rate, the $678 billion commercial backlog, and management's demonstrated capacity-building pace give Microsoft a credible commercial foundation for its infrastructure push. Investors will need to watch closely whether the new capacity generates enough cloud revenue and free cash flow to deliver attractive returns on the hundreds of billions of dollars being committed to AI infrastructure.