Microsoft to Spend $80B on AI Data Centers This Year

(Bloomberg) -- Microsoft plans to spend $80 billion this fiscal year building out data centers, underscoring the intense capital requirements of artificial intelligence.

More than half of this projected spending through June 2025 will be in the US, Microsoft President Brad Smith wrote in a blog post Friday (January 3). Recent AI progress is thanks to “large-scale infrastructure investments that serve as the essential foundation of AI innovation and use,” Smith wrote.

Cloud infrastructure providers like Microsoft and Amazon have been racing to expand computing capacity by constructing new data centers. In the previous fiscal year ending in June 2024, Microsoft spent more than $50 billion on capital expenditures, the vast majority related to server farm construction fueled by demand for artificial intelligence services. 

Smith also cautioned the incoming Trump administration against “heavy-handed regulations” related to AI. “The most important US public-policy priority should be to ensure that the US private sector can continue to advance with the wind at its back,” Smith wrote.

The country needs “a pragmatic export control policy that balances strong security protection for AI components in trusted data centers with an ability for US companies to expand rapidly and provide a reliable source of supply to the many countries that are American allies and friends,” Smith wrote.

Related:The Biggest AI Data Center Stories That Shaped 2024

Much of the spending on data centers goes toward high-powered chips from companies including Nvidia and infrastructure providers such as Dell Technologies.

The massive AI-enabled server farms require lots of power, which prompted Microsoft to strike a deal to reopen a reactor at the Three Mile Island nuclear power plant in Pennsylvania, the site of a notorious partial meltdown in 1979. Amazon and Google have also signed nuclear power agreements.