Microsoft to pour $80 billion into AI datacentres in 2025
More than half of the investment will be directed toward US-based facilities
Microsoft has announced plans to invest $80 billion in datacentres specifically designed to handle the immense computational demands of AI workloads during its 2025 fiscal year
In a blog post published Monday, Microsoft President and Vice Chair Brad Smith described AI as a transformative force with the potential to redefine global economic competitiveness.
Calling AI a "golden opportunity," Smith outlined Microsoft's vision of leveraging the technology to empower individuals with skills for higher-paying jobs and lifelong learning opportunities.
"AI offers not only new tools for people's work but also new ways to help people learn almost anything," Smith stated.
"This should be our national north star."
More than half of Microsoft's investment will be directed toward US-based facilities, with the remainder fuelling global AI datacentre expansion.
"Today, the United States leads the global AI race thanks to the investment of private capital and innovations by American companies of all sizes, from dynamic start-ups to well-established enterprises," Smith said.
He highlighted the company's strategic partnerships, including its substantial investment in OpenAI and collaborations with rising AI players like Anthropic and xAI, as key drivers of this leadership.
Microsoft's investment in OpenAI has provided the startup with crucial cloud infrastructure and integration of its AI models into core products like Windows, Teams, and others.
The company's financial performance reflects this AI-driven growth. Revenue from Azure and other cloud services surged by 33% in the first quarter of fiscal 2025, with AI services contributing a significant 12 percentage points to this growth.
In his statement, Smith also acknowledged the intensifying global competition in AI, particularly from China. He highlighted China's efforts to offer developing countries subsidised access to critical AI chips and its plans to establish localised AI datacentres.
"The Chinese wisely recognize that if a country standardizes on China's AI platform, it likely will continue to rely on that platform in the future," Smith warned.
Smith concluded by calling for a collaborative effort between government, the private sector, and educational institutions to realise this vision.
"The key to the future is to bring together the best of what we can offer across American society, from across our private sector, educational and non-profit institutions, and government. Teamwork based on technology collaboration will build the foundation for a golden AI opportunity—and for the next generation of American prosperity," he said.
Microsoft's plans are part of a broader industry trend.
Amazon, through its cloud arm AWS, projected a $75 billion capital expenditure for 2024, with expectations to surpass that figure in 2025.
According to Taiwan-based TrendForce, AI servers will account for more than 70% of the server industry's total value in 2025, reaching approximately $298 billion.
Omdia, another leading analytics firm, predicts that AI-related systems will comprise 20% of server shipments this year but will consume an outsized 73% of server capital expenditures due to their higher costs.
Omdia estimates Nvidia accounted for 43% of server capex in 2024, with its dominance expected to persist despite slowing growth in market share.
Specialised cloud providers like CoreWeave are also gaining traction. Analysts suggest CoreWeave's aggressive spending could surpass that of Oracle in 2025 as niche players compete to carve out market share.