Dive Brief:
- Microsoft expects to spend roughly $80 billion on AI-enabled data centers to train large language models and deploy AI and cloud-based applications during its current fiscal year, the company’s vice chair and president, Brad Smith, said in a blog post Friday.
- More than half of the investments will be in the U.S., according to Smith. The tech giant’s current fiscal year 2025 runs through June 30.
- AI workloads triggered cloud capacity constraints last year, ratcheting up an ongoing data center building boom. Microsoft responded by nearly doubling capital investments to $20 billion in the first quarter of its 2025 fiscal year, CFO Amy Hood said during an October earnings call. “We expect capital expenditures to increase on a sequential basis given our cloud and AI demand signals,” she added.
Dive Insight:
Cloud infrastructure, AI compute capacity and domestic politics coalesced in Smith’s post, which laid out a three-pronged plan for U.S. economic success centered around data centers, upskilling and technology exports.
“The incoming administration can strengthen these foundational elements, building on the work from President Trump’s first term,” Smith said, pointing to the 2019 American AI Initiative. “President Trump and Congress should expand on these efforts to support advancing America’s AI leadership.”
Microsoft has been growing its Azure public cloud empire at home and abroad.
In addition to breaking ground on a $3.3 billion Wisconsin facility last year, Microsoft launched its first data center region in Mexico and further expanded its cloud footprint in France, Germany and Sweden.
“We intend to invest more than $35 billion in 14 countries within three years to build trusted and secure AI and cloud data center infrastructure,” Smith said. “This is part of a global infrastructure that now reaches 40 countries.”
In September, the company partnered with investment firms Blackrock, MGX and Global Infrastructure Partners to amass $100 billion for data centers and supporting power infrastructure.
Microsoft isn’t operating in a vacuum. AWS and Google Cloud, the two other global cloud giants, are also pouring billions into AI infrastructure, driving massive growth in the data center market.
Big tech companies spent $180 billion on data center expansions and related infrastructure last year, according to Dell’Oro Group research. The firm told CIO Dive it expects some cooling in the coming months as cloud providers consolidate expansion plans.
But hunger for AI-optimized compute has only intensified.
Hyperscalers were on pace to deploy over 5 million AI accelerators in 2024, Dell’Oro Group found in its analysis of third quarter financials.
“Demand for accelerators has been growing at a breakneck pace as the hyperscalers race to deploy infrastructure for the training and inference of large language models,” Baron Fung, senior research director at Dell’Oro Group, said in the report.
Microsoft sees its success as dependent on a competitive technology ecosystem, Smith said in the blog post. “This includes our longstanding competitors, chip suppliers, applications companies, systems integrators, service providers, and the millions of software developers who use our products to create customized solutions,” he said.
