Big Tech companies have reportedly been increasing their investments in artificial intelligence (AI) infrastructure, with a particular focus on expanding their presence in international markets.
Microsoft and Amazon have already allocated over $40 billion combined for AI-related and data center projects worldwide this year, the Wall Street Journal (WSJ) reported Thursday (May 23).
Microsoft has outlined plans to invest over $16 billion in various countries, including France, Germany, Japan, Malaysia, Spain and Indonesia, the report said. Similarly, Amazon has earmarked investments of $15 billion in Japan, $9 billion in Singapore, $5 billion in Mexico and $1.3 billion in France.
The move to invest heavily in AI infrastructure overseas is driven by the desire to tap into the growing global demand for AI technologies, according to the report.
The rationale behind these investments is driven by the need to have data centers built in regions where the shift to cloud computing is happening, ensuring faster processing times, data privacy and security, per the report.
Wedbush analyst Daniel Ives told the WSJ that Big Tech companies are looking to “spread their wings” and establish a strong foothold in international markets.
D.A. Davidson analyst Gil Luria predicted that tech companies will spend more than $100 billion this year on AI infrastructure, and this spending is expected to continue to rise in line with increasing demand, per the report.
While Microsoft and Amazon are leading the charge in expanding their AI infrastructure overseas, other tech giants are expected to follow suit, according to the report. Google’s parent company, Alphabet, has mainly focused its AI and data center investments in the United States so far. However, Ives predicted that Alphabet, along with Meta Platforms, will aggressively expand overseas to keep up with the competition.
This report comes a day after chipmaker Nvidia reported that demand for its products has been driven by companies and countries that are transitioning from traditional data centers to “AI factories.”
“In Q1, we worked with over 100 customers building AI factories ranging in size from hundreds to tens of thousands of GPUs, with some reaching 100,000 GPUs,” Nvidia Executive Vice President and Chief Financial Officer Colette Kress said Wednesday (May 22) during the company’s quarterly earnings call.