Microsoft Corp. (NASDAQ:MSFT) Chairman and CEO Satya Nadella has revealed that the true bottleneck for the burgeoning AI industry isn’t a shortage of advanced GPUs, but rather the fundamental physical infrastructure required to power them.

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Nadella Exposes AI’s Hidden Crisis After $35 Billion Anthropic Deal

This insight comes amidst a massive new strategic partnership with AI startup Anthropic, valued at approximately $35 billion. The deal sees Microsoft investing $5 billion into Anthropic, a prominent competitor to OpenAI. Whereas Anthropic is committing to spending $30 billion on Microsoft Azure compute capacity.

However, despite this monumental demand, Nadella’s comments suggest Microsoft’s challenge lies not in attracting customers, but in scaling the physical “token factories”, his term for the data centers that process AI computations.

“We are supply-constrained on powered shells,” Nadella stated in a Nov. 18 podcast with Cheeky Pint, offering a stark contrast to the dotcom-era bust.

The “powered shell” refers to a data center building that has been fully connected to the power grid, complete with massive electrical ...