Microsoft is on track to invest around $80 billion this fiscal year to build out AI-enabled data centers, company president Brad Smith said Friday.
Those data centers will be used to train AI models and deploy AI and cloud-based applications around the world — although more than half of the investment will be in the US, Smith said in a blog post highlighting the opportunities technology offers for building the country’s economy.
“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,” he wrote in the blog post titled The Golden Opportunity for American AI, continuing, “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.”
The demand for AI is so huge that market research firm IDC expects that global spending on AI-supporting technologies will surpass $749 billion by 2028 — and nearly 67% of the projected $227 billion AI spending in 2025 will come from enterprises embedding AI capabilities into their core business operations.
While Microsoft’s $80 billion spending target might sound like a lot for just one year of capital expenditure limited to AI infrastructure improvements, AI-enabled data centers don’t come cheap.
AI data centers must support much higher power densities than traditional data centers: Nvidia’s GB200 NVL72 systems are estimated to consume up to 120kW per rack, for instance, with classic computing infrastructure consuming perhaps one-tenth of that. On top of that, the AI-enabled data center will need liquid cooling, advanced networking infrastructure, and advanced infrastructure management software.
And Microsoft isn’t the only one that is ramping up its investments into AI-enabled data centers. Rival cloud service providers are all investing in either upgrading or opening new data centers to capture a larger chunk of business from developers and users of large language models (LLMs).
In a report published in October 2024, Bloomberg Intelligence estimated that demand for generative AI would push Microsoft, AWS, Google, Oracle, Meta, and Apple would between them devote $200 billion to capex in 2025, up from $110 billion in 2023.
Microsoft is one of the biggest spenders, followed closely by Google and AWS, Bloomberg Intelligence said. Its estimate of Microsoft’s capital spending on AI, at $62.4 billion for calendar 2025, is lower than Smith’s claim that the company will invest $80 billion in the fiscal year to June 30, 2025.
Both figures, though, are way higher than Microsoft’s 2020 capital expenditure of “just” $17.6 billion. The majority of the increased spending is tied to cloud services and the expansion of AI infrastructure needed to provide compute capacity for OpenAI workloads.
Separately, last October Amazon CEO Andy Jassy said his company planned total capex spend of $75 billion in 2024 and even more in 2025, with much of it going to AWS, its cloud computing division.
Source:: Network World