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Even with a largely captive customer base, Microsoft is unlikely to resort to price hikes as a way to manage demand, at least in the short term, analysts said.

With immature technologies such as generative AI, Microsoft and its competitors face challenges accurately forecasting changes in demand, according to digital services firm West Monroes lead of high-tech and software practice, Dhaval Moogimane. While occasional discrepancies between capacity and demand may persist, it is unlikely to manifest as a protracted or systemic issue that would lead to price hikes, Moogimane said.

Instead, said Shimmin, Microsoft and other hyperscalers will likely resort to other tactics to manage demand, such as downgrading response times for customers paying less or making use of batch inferencing, a process in which predictions are made, stored, and later presented on request. This can be more efficient than online or dynamic inferencing, where predictions are generated in real time.

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Microsoft cant keep up with demand for AI in the cloud for now - CIO