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Dive Brief:
- Microsoft expects to spend roughly $80 billion on AI data centers to train large language models and deploy AI-based and cloud applications in its current fiscal year, said the company’s vice president and president, Brad Smith, in a blog post on Friday.
- More than half of the investments will be in the US, according to Smith. The tech giant’s current 2025 fiscal year ends on June 30.
- AI workloads led to cloud capacity constraints last year, adding to the ongoing data center construction boom. Microsoft responded by nearly doubling capital investments to $20 billion in the first quarter of its 2025 fiscal year, Chief Financial Officer Amy Hood said during an October earnings call. “We expect capital expenditures to increase sequentially given our cloud and AI demand signals,” he added.
Diving knowledge:
Cloud infrastructure, AI computing power and domestic politics all came together in Smith’s release, which laid out a three-pronged plan for America’s economic success centered on data centers, the improvement of skills and technology exports.
“The incoming administration can strengthen these foundational elements, building on the work of President Trump’s first term,” Smith said, noting the 2019 American AI Initiative. “President Trump and Congress should expand these efforts to support the advancement of 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 over the next three years to build a reliable 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 raise $100 billion for data centers and supporting power infrastructure.
Microsoft is not operating in a vacuum. AWS and Google Cloud, the other two 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 company told CIO Dive that it expects some cooling in the coming months as cloud providers solidify expansion plans.
But the hunger for AI-optimized computing has only intensified.
Hyperscalers were poised to deploy more than 5 million AI accelerators by 2024, Dell’Oro Group found in its analysis of third-quarter financials.
“Demand for accelerators has been growing at a breakneck pace as hyperscalers race to deploy infrastructure for training and inference of large language models,” said Baron Fung, senior director of research at Dell’Oro Group , in the report.
Microsoft sees its success as dependent on a competitive technology ecosystem, Smith said in the blog post. “This includes our long-standing competitors, chip suppliers, application companies, system integrators, service providers and the millions of software developers who use our products to build custom solutions,” he said.
