Microsoft to Spend $80 Billion on Data Centers in 2025

Microsoft is more than keeping apace with Amazon in trying to distinguish itself as the nationwide data center leader.

The tech behemoth plans to spend a whopping $80 billion this year to put data centers, the Commercial Observer reported. The industrial projects are focused on helping the tech giant handle the growing demands of artificial intelligence.

More than half of the $80 billion budget is expected to be deployed in the United States. The facilities will help train AI models and distribute cloud-based applications across the globe, according to Microsoft vice chair Brad Smith.

The company had plenty going on in the data center space a year ago. In September, it filed plans for a 245,000-square-foot data center in the Westover Hills area of San Antonio, Texas. It’s pursuing a $483 million data center expansion in Castroville, also in the San Antonio market.

The data center market has doubled in capacity since 2020, according to a report released by JLL in August. Occupancy rates have jumped by 30 percent in the intervening years, while asking rents have surged anywhere between 13 and 37 percent on an annual basis.

Microsoft is positing itself as a significant player in the data center sector, and poised to give Amazon a run for its money.

The e-commerce giant spent more than $2 billion in industrial acquisitions last year, more than doubling the $920 million spent in the sector by the company the previous year. Amazon acquired more than 3,000 acres in 14 states, according to CoStar data.

It’s a mere fraction of what Microsoft is prepared to spend this year. Considering the potential of artificial intelligence, however — and the computing power needed to fuel the industry — there will likely be plenty more development action in the data center space for years to come.

Blackstone, for one, has bet big on the sector. The firm acquired AirTrunk, the largest data center operator in the Asia-Pacific region, for $24 billion.

— Holden Walter-Warner