Microsoft expects to spend $80 bn on AI this fiscal year

Microsoft president Brad Smith said the company is on track to pump about $80 billion into artificial intelligence (AI) this fiscal year.

Smith contended AI is poised to transform all aspects of life, and it is imperative that the United States be the global leader when it comes to the technology, he wrote in an online post.

"In many ways, artificial intelligence is the electricity of our age, and the next four years can build a foundation for America's economic success for the next quarter century," Smith said.

"The United States is poised to stand at the forefront of this new technology wave, especially if it doubles down on its strengths and effectively partners internationally."

Smith called on President-elect Donald Trump and Congress to expand support for AI innovation with moves such as increased funding for research at universities and the National Science Foundation.

China and the United States are racing to spread their AI systems to other countries in an effort to become the de facto standard, according to Smith.

"Given the nature of technology markets and their potential network effects, this race between the US and China for international influence likely will be won by the fastest first mover," Smith reasoned.

"Hence, the United States needs a smart international strategy to rapidly support American AI around the world."

China has started offering developing countries subsidized access to scarce computer chips and help building local AI datacenters, according to Smith.

"The Chinese wisely recognize that if a country standardizes on China's AI platform, it likely will continue to rely on that platform in the future," Smith said.

The US should move quickly to promote its AI technology as superior and more trustworthy, enlisting allies in the effort, he recommended.

For its part, Microsoft is on pace to invest about $80 billion this year to build out AI datacenters, train AI models and deploy cloud-based applications around the world, according to Smith.

Microsoft's 2025 fiscal year ends at the close of June.

Microsoft rivals Amazon, Google, and OpenAI have also been spending billions of dollars on AI even though it remains unclear how and when they expect to profit from those investments.