Microsoft is making a significant investment in its artificial intelligence (AI) ambitions, allocating $80 billion (R1.5 trillion) this fiscal year for data centre construction. This massive spending spree underscores the immense capital required to develop and run powerful AI systems.
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According to a blog post by Microsoft President Brad Smith, more than half of this expenditure, projected to last through June 2025, will be directed towards data centres within the United States. Smith emphasizes the crucial role of “large-scale infrastructure investments” in driving AI innovation and deployment.
This focus on data centre expansion reflects a broader trend within the cloud computing industry. Companies like Microsoft and Amazon are engaged in a fierce competition to bolster their computing capabilities by building new data centres.
Microsoft’s data centre spending has been steadily increasing. In the previous fiscal year (ending June 2024), the company spent over $50 billion on capital expenditures, primarily focused on server farm construction to meet the growing demand for AI services.
Smith also expressed concerns regarding potential “heavy-handed regulations” related to AI by the incoming Trump administration. He advocates for a “pragmatic export control policy” that balances security measures for AI components within trusted data centres with the ability for US companies to expand globally and serve allied nations.
A significant portion of data centre spending goes towards acquiring high-powered chips from companies like Nvidia and server infrastructure from providers like Dell Technologies. These massive AI-powered server farms require substantial energy consumption, prompting Microsoft to secure a deal to reopen a reactor at the Three Mile Island nuclear power plant in Pennsylvania. This decision comes despite the plant’s history of a partial meltdown in 1979. Similar nuclear power agreements have also been struck by Amazon and Google.
