Microsoft Plans to Invest $80 Billion in AI Data Centers in Fiscal 2025

Generative AI products have sparked a surge in data center development. Microsoft is continuing this trend with plans to invest $80 billion in fiscal year 2025 to build AI-enabled data centers, the company revealed in a recent blog post.

“Not since the invention of electricity has the United States had the opportunity it has today to harness new technology to invigorate the nation’s economy,” wrote Microsoft President and Vice Chair Brad Smith. “In many ways, artificial intelligence is the electricity of our age, and the next four years can build a foundation for America’s economic success for the next quarter century.”

$80 billion dedicated to AI data centers and deployment

Microsoft’s vision is built on three core pillars:

• Advancing and investing in AI technology and infrastructure within the U.S.
• Implementing AI skilling programs to encourage AI adoption and career opportunities in the country.
• Exporting American AI technologies to political allies.

The $80 billion investment will be divided into various projects, including a task to “build out AI-enabled datacenters to train AI models and deploy AI and cloud-based applications around the world,” Smith wrote. Over half of the investment has been earmarked for infrastructure within the U.S.

This investment into AI data centers far exceeds Microsoft’s total capex spending in 2024, which totaled at least $53 billion.

‘AI race’ with China rages on

Meanwhile, international investment will further Microsoft’s goal of dominating external markets with U.S. AI products, particularly in areas facing competition from China.

Microsoft’s reference to AI data centers in the same breath as China’s Belt and Road investments shows the ongoing and well-documented “AI race” is going strong. Both countries seek to add AI and cloud data center infrastructure to global infrastructure. Microsoft highlighted the United Arab Emirates and Kenya as footholds for the U.S. to which Microsoft provided AI infrastructure and supply line expertise.

“The rapid development of China’s AI sector has heightened competition between American and Chinese AI, with much of this likely to play out during the next four years in international markets around the world,” Smith wrote.

SEE: The U.S. alleges Chinese threat actors were behind a breach of U.S. Treasury systems in December.

In discussing the upcoming presidential administration, Smith recalled past executive orders fostering AI development. He requested that the U.S. government “expand on these efforts” and support AI research. “Pragmatic” export control policies and loose regulations will help Microsoft foster the U.S. economy through its sale of AI products, Smith wrote.

Microsoft’s AI products proliferate through PCs and smart devices

In recent months, Microsoft has made additional moves that reaffirm its commitment to AI.

In 2024, the tech giant invested about $14 billion in OpenAI. Smith explained that AI skilling will be essential for the future of American jobs. Microsoft provides free training in the basics of generative AI and has continued efforts to upskill professionals and AI hobbyists, including in APAC.

Microsoft has also continued to produce AI PCs equipped with the Copilot+ generative AI assistant. The Redmond-based company also has partnered with other hardware makers to enhance AI infrastructure options like Azure.

Both LG and Samsung are adding shortcuts to Microsoft Copilot to their smart TVs, the companies announced on Jan. 6 at the CES trade show in Las Vegas.

Smith believes Microsoft’s AI efforts will ultimately support the American economy. However, he noted that the success of these efforts is contingent upon a broad technology ecosystem, including the entire chip economy, software developers who create solutions for customers, and the construction firms building data centers.

“Together,” he explained, “all these groups have enabled the technology sector to become an economic backbone for the United States and the world.”