 "Powering AI dreams: Microsoft bets $80 billion on data centre revolution")
Microsoft has announced plans to allocate approximately $80 billion in the financial year 2025 towards expanding data centres to support the development of artificial intelligence (AI) models and the deployment of AI and cloud-based applications, according to a recent blog post.
The launch of OpenAI's ChatGPT in 2022 triggered a surge in AI investment, as businesses across industries strive to incorporate AI into their products and services. AI demands substantial computing resources, driving the need for advanced data centres capable of connecting thousands of chips into clusters.
To strengthen its AI infrastructure and expand its data centre footprint, Microsoft has already committed significant financial resources. According to Visible Alpha, analysts estimate Microsoft's capital expenditure in the financial year 2025 , including capital leases, to reach $84.24 billion. In the first quarter of the financial year 2025 (company's FY runs from July 1 to June 30), the company's capital spending rose by 5.3 per cent, amounting to $20 billion, according to a report by Reuters.
As the primary supporter of OpenAI, Microsoft holds a prominent position in the AI competition among major tech firms, thanks to its exclusive collaboration with the creator of ChatGPT.
Brad Smith, Microsoft's vice chair and president, noted in the blog post that more than half of the $80 billion investment will be directed to projects within the US.
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This marks a significant shift for Microsoft, which has been a major supporter of OpenAI in recent years. The company had previously highlighted its early access to OpenAI's models as a key advantage, particularly when it launched 365 Copilot in March 2023, showcasing the use of OpenAI's GPT-4 model.
The move is reportedly driven by concerns about cost efficiency and performance speed for enterprise users.
A Microsoft spokesperson confirmed that OpenAI remains a partner for cutting-edge AI models, with the existing agreement allowing Microsoft to customise OpenAI's models.
(With agency inputs)