Microsoft (MSFT+0.88%) is planning to spend tens of billions of dollars to build on its artificial intelligence ambitions this year.
The tech giant is on track to invest $80 billion in AI-enabled data centers in fiscal year 2025, which ends on June 30, Microsoft President Brad Smith said in a blog post on Friday. The data centers will be used for training and deploying AI models and cloud-based applications. More than half of the investment will be focused in the U.S., Smith added.
“As we look into the future, it’s clear that artificial intelligence is poised to become a world-changing GPT [General-Purpose Technology],” Smith said. “AI promises to drive innovation and boost productivity in every sector of the economy. The United States is poised to stand at the forefront of this new technology wave, especially if it doubles down on its strengths and effectively partners internationally.”
The U.S. is the leader in “the global AI race” due to private capital investments and innovation by U.S.-based companies, Smith said, noting Microsoft’s partnerships with ChatGPT maker OpenAI and the startup’s rivals, Anthropic and xAI.
Under the incoming Trump administration, Smith said the U.S. can “build on the foundational ideas set for AI policy” under the president-elect’s first term, including the 2019 executive order on maintaining the U.S.’s AI leadership. He added that “America’s technology success” requires a partnership between the government, the private sector, and educational and non-profit institutions.
In October, Microsoft chief executive Satya Nadella said on the company’s post-earnings call that the tech giant had run into external constraints due to high demand for AI training and inferencing. Data center constraints left investors unimpressed by Microsoft’s first fiscal quarter results, sending its shares down by over 5%.
“[Data centers] don’t get built overnight,” Nadella said. “Even in Q2 for example, some of the demand issues we have, or rather our ability to fulfill demand is because of, in fact, external third-party stuff that we leased moving up. That’s the constraints we have.”
However, Nadella said he felt “pretty good” going into the second half of the fiscal year that some supply would catch up with demand.
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