Microsoft Corporation (NASDAQ:MSFT) is among the companies that are investing heavily in data centers for AI growth. The company's CEO has a warning for the increased energy needed for the AI sector and for fears of an AI bubble.
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AI Pressure on Data Centers
As the AI sector continues to grow, tech firms like Microsoft are making investments in data centers. The increased energy needed for those data centers are "putting a lot of pressure" on the electric grid, Microsoft CEO Satya Nadella says.
"At the end of the day, I think that this industry—to which I belong—needs to earn the social permission to consumer energy, because we're doing good in the world," Nadella said in an interview with Mathias Döpfner, as reported by Politico.
Nadella cautioned that the AI sector could face public opposition due to its impact on the energy sector.
Nadella said the AI sector could garner support if it "results in economic growth that is broad-spread in the economy."
As for the potential AI bubble, the Microsoft CEO brushed off some of the concerns, but offered a warning. "It can't be a few companies in one sector, in one continent having all the returns, it has to be a much broader phenomenon. Otherwise it'll be a road to nowhere. But I feel pretty confident that we are on a path to this. But at the same time, it won't be linear – nothing is."
Read Also: Microsoft Q1 Earnings Highlights: AI, Cloud Power Double Beat – ‘Strong Start To The Fiscal Year’
Microsoft's AI Growth
Nadella said Microsoft is being disciplined with its capital spending related to AI, as the company sees huge growth for its AI-related products.
The Microsoft CEO highlighted the company's Azure cloud platform, which had revenue growth of 40% year-over-year in the first quarter.
Overall, Microsoft's first-quarter revenue was $77.7 billion, up 18% year-over-year.
The company's Intelligent Cloud segment saw the largest year-over-year revenue increase at 28% of the company's key operating segments. Overall Microsoft Cloud revenue was $49.1 billion in the quarter, up 26% year-over-year.
Microsoft's remaining performance obligation for Microsoft Cloud stood at $392 billion at the end of the quarter, up 51% year-over-year.
“Our planet-scale cloud and AI factory, together with Copilots across high volume domains, is driving broad diffusion and real-world impact,” Nadella said of the quarterly results. “It’s why we continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead.”
Microsoft Stock Price Action
Microsoft shares trade at $489.92 on Tuesday versus a 52-week trading range of 4344.79 to $555.45. Microsoft stock is up 17.1% year-to-date in 2025.
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