Microsoft plans to double its data centre footprint in 2 years amid AI boom

Microsoft is reportedly scaling up its infrastructure in response to surging demand for artificial intelligence (AI) and cloud services.

CEO Satya Nadella delivered his annual letter to stakeholders, outlining the company’s record-breaking fiscal year 2025 performance and its position at the forefront of the AI revolution.

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Nadella told investors that Microsoft plans to double its data centre footprint over the next two years.

Pivotal role of AI centres

"Fifty years after our founding, Microsoft is once again at the heart of a generational moment in technology as we find ourselves in the midst of the AI platform shift,” Nadella wrote, stressing the company’s philosophy to “think in decades but execute in quarters.”

Microsoft has opened new data centres across six continents and now operates over 400 facilities in 70 regions, adding more than two gigawatts of new capacity in fiscal year 2025 alone.

According to the Wall Street Journal, Nadella said the company will “boost its AI capacity by more than 80 per cent this year,” underscoring Microsoft’s determination to remain a leader in AI infrastructure.

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The move highlights the pivotal role of data centres in enabling rapid AI adoption across industries, as businesses increasingly depend on cloud-based technologies to power their operations.

Microsoft-OpenAI partnership

Microsoft’s ambitions are closely tied to its partnership with OpenAI, for which it was, until recently, the exclusive cloud provider, a collaboration that has generated substantial synergies.

Although OpenAI has diversified its cloud partnerships this year, Nadella described their collaboration as “one of the most successful partnerships and investments our industry has ever seen” and expressed confidence that both companies would continue to benefit mutually from each other’s growth.

Despite Microsoft’s robust financial results and bold expansion plans, its shares fell by four per cent following reports that spending on AI initiatives will increase over the coming year, according to CNBC.

This reaction suggests that, while the market recognises the strategic importance of AI, investors remain cautious about the costs involved in maintaining Microsoft’s dominant position.

Cloud race intensifies

Microsoft’s data centre strategy mirrors that of Google and Amazon, who are also making substantial investments in infrastructure to support the booming AI sector.

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The competition for computing power and cloud real estate is expected to intensify as more businesses adopt AI to gain a competitive edge. The accelerating pace of AI adoption has made data centres central to the technology economy, underpinning everything from cloud-based software to machine learning models.

Microsoft’s aggressive approach to expanding its infrastructure indicates that it views scalable data capacity as a crucial differentiator in the global race for AI leadership.

The company’s expanded data centre network will play a vital role in supporting both its internal AI ambitions and those of its global client base.