Microsoft is set to invest $80 billion in fiscal 2025 to expand its AI datacenter capabilities, Brad Smith, the company’s president and vice chairman wrote in a blog post. Microsoft sees artificial intelligence as the next industrial revolution and wants to participate in it. While analysts certainly were aware of the software giant’s AI ambitions, few if any expected the company to bet that much money on a technology that has yet to prove its profitability.

“In FY 2025, Microsoft is on track to invest approximately $80 billion to build out AI-enabled datacenters to train AI models and deploy AI and cloud-based applications around the world,” wrote Brad Smith in his blog post. “More than half of this total investment will be in the United States, reflecting our commitment to this country and our confidence in the American economy.”

Microsoft’s move solidifies its position as a leader in AI, which is, of course, closely tied to its exclusive partnership with OpenAI. Naturally, this also means that OpenAI will benefit from this major investment. Analysts—and possibly rivals like Google, Meta, and xAI—probably never expected Microsoft to invest such a significant amount in AI, but that is exactly what is happening.

“This is above most analysts estimates,” wrote Ben Bajarin, CEO and Principal Analyst Creative Strategies. “Expect all their CapEx models to go up.”

While Microsoft disclosed that the investment will cover datacenters, it did not reveal whether this also includes power infrastructure for datacenters, which the company envisions to include both small and large nuclear power plants capable of powering small cities. As these are capital expenditures, and with plans to operate nuclear power facilities by 2028, the budget may also include spending on these plants. However, this remains speculative for now.

When it comes to actual hardware spending, rumors suggest that Microsoft is one of Nvidia’s primary customers for the Blackwell platform and is willing to invest in datacenter infrastructure involving 120 kW to rumored 140 kW cabinets (up from 40 kW today). Redesigning datacenters to accommodate such infrastructure is costly, but Microsoft appears well-prepared in terms of its willingness to spend.

Microsoft’s president sees AI as the next step in the industrial revolution, akin to the invention of the steam engine, which propelled the United Kingdom to the pinnacle of the global economy, and the widespread adoption of electricity in the United States, which eventually established America as the world’s leading economy. As industries grow more complex and interconnected, AI is becoming a crucial technology across many sectors of the economy.

“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,” wrote Brad Smith. “At Microsoft, we have seen this firsthand through our partnership with OpenAI, from rising firms such as Anthropic and xAI, and our own AI-enabled software platforms and applications.”