If you’ve ever clicked on a recipe blog and found yourself scrolling through the author’s life story about their dog’s gluten intolerance before hitting the ingredient list, you’re not alone. Apparently, Brad Smith, Microsoft’s president, feels the same way. He cut the fluff and went straight to the point in his recent blog post: Microsoft plans to drop $80 billion this fiscal year on AI-enabled data centers. (Sorry doom and gloomers, AI looks like it’s here to stay in 2025).

In what he probably thinks is the blog post equivalent of the Gettysburg Address, Smith called AI “the electricity of our age.” (Guess Thomas Edison walked so OpenAI could run.) Over half of that $80 billion will stay in the U.S., funding colossal data centers to meet AI’s sky-high computing demands. Last year, Microsoft spent $50 billion on capital expenditures, mostly for data centers. But this year? They’re tossing in another $30 billion (a 60% increase) because apparently last year’s infrastructure is already yesterday’s news. The AI arms race is officially cutthroat, and no one wants to be the tech company stuck getting made fun of at the billionaire gatherings. For instance, Google just pledged $30 billion for its cloud infrastructure, Amazon’s AWS is funneling billions into staying on top, and NVIDIA’s GPUs sales saw a 170% year-over-year growth last quarter.

But Smith’s post was more than a humblebrag about Microsoft’s bank account. It was also a pointed warning. Sure, the U.S. is leading the AI race now, but China’s making moves that could flip the script. Beijing is throwing subsidies at chipmakers, building AI infrastructure across developing nations, and positioning itself to write the rulebook for global AI standards. According to Smith, the AI race is really a fight for geopolitical dominance. (No pressure, right?) To prevent the U.S. from losing ground, Smith urged policymakers to embrace “pragmatic export controls.” In simpler terms: Please don’t let government red tape turn us into the MySpace of the AI world while China becomes the Facebook.

Yet, for all the swagger, let’s not pretend this $80 billion bet is risk-free. Microsoft might be leading the charge, but other companies have learned the hard way that overspending on AI can backfire. Intel, for instance, heavily invested in AI and advanced chip production in 2024, only to see its stock crater by 60%. (Shocking, right? Turns out, you can’t just throw money at innovation and hope it sticks.) That said, Microsoft’s $13 billion investment in OpenAI is already paying off, with AI features baked into products like Windows and Teams. Their Azure cloud platform is thriving, too, with 33% revenue growth last quarter… 12% of which came from AI alone. Analysts predict that Microsoft’s capital expenditures for fiscal 2025 could hit $84.24 billion, a 42% jump from last year. That’s enough to make even Amazon and Google squirm a little.

Sure, AI might be “the electricity of our age” (or whatever catchy metaphor Smith is workshopping next), but turning that potential into predictable profits is tough to do.

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