Microsoft will use Lumen Technologies' network equipment to expand its capacity for AI workloads, the companies said on Wednesday, as the technology giant looks to meet growing demand at its data centers.

Microsoft said in April that a shortage of data center infrastructure needed to deploy AI models was hampering its ability to capitalize on the boom in the technology.

The company has taken an early lead in the AI race thanks to its investment in ChatGPT-maker OpenAI and has been pouring billions of dollars into cloud infrastructure to maintain its edge over Google-parent Alphabet and Amazon.com.

As part of the deal on Wednesday, Lumen will tap the tech giant's Azure cloud services to cut costs.

The switch to Azure, the companies said, will help improve Lumen's cash flow by more than $20 million over the next 12 months, aiding the turnaround efforts at the company that restructured its debt in March.

Lumen, whose shares were 3% higher in early trading, had $18.59 billion in long-term debt as of March 31, according to its latest quarterly earnings report.

  - Reuters