Microsoft Commits To $80B AI Datacenter Investment In FY25, Suggests Steps To Cement US’ AI Leadership: Retail Sentiment Subdued

Microsoft Corp. ($MSFT), a frontrunner in the artificial intelligence (AI) revolution, has doubled up its commitment to the technology. In a blog post published on Friday, Brad Smith, Vice Chair and President of Microsoft, said the software giant is on track to invest $80 billion to build out AI-enabled datacenters to train and deploy AI models well as cloud-based applications around the world.

More than half of this investment will be in the U.S.

The proposed investment comes amid AI emerging as a world-changing generative pre-trained transformer (GPT), driving innovation and boosting productivity in every sector of the economy, Smith said. GPT is a family of advanced neural networks designed for natural language processing tasks, which helps generate human-like text and content. 

Smith highlighted Microsoft’s OpenAI partnership, its own AI-enabled software platforms and applications, and the emergence of companies such as Anthropic and xAI as testaments to America’s lead in the global AI race. 

He noted that AI models and chips are now moving from Graphics Processing Units (GPUs) to AI Accelerators with Tensors, and software programs are being redesigned to operate as AI-enabled applications. 

He added that the massive data centers are a collaborative effort of construction firms, steel manufacturers, and other manufacturers, involving innovative advances in electricity and liquid cooling.

Technological innovations is a function of R&D, which in turn hinges on two critical ingredients such as basic research and product development by companies of all sizes, Smith said. 

‘’The incoming Administration can strengthen these foundational elements, building on the work from President [Donald] Trump’s first term,’’ he added.

While Smith acknowledged U.S.’ robust and innovative private sector, he called upon government policy that can sustain the country’s leadership through well-funded basic research at universities and broad support for private sector innovation.

He also expressed confidence in the U.S. winning the AI race, beating China, through advancing international adoption of U.S. AI. This can be furthered by a balanced and commonsense approach to export control policy and solidifying diplomatic relations, he said.

On the earnings call following the release of the fiscal year first-quarter results, CFO Amy Hood said Microsoft’s capital expenditures, including financial leases, were $20 billion. She also flagged a sequential increase in capex due to cloud and AI demand signals.

MSFT sentiment and message volume January 5, 2025, as of 10:33 pm ET | Source: Stocktwits

On Stocktwits, retail sentiment toward Microsoft stock stayed ‘neutral’ (51/100), and the AI datacenter investment news did not trigger much retail chatter. Message volume remained ‘low.

Microsoft stock gained 12.7% in 2024, underperforming its Magnificent Seven peers and the S&P 500 Index (+23.30%).

The stock settled Friday’s session up 1.14% at $423.35.

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