April 23 (Reuters) - Microsoft said on Thursday that it will invest A$25 billion ($17.9 billion) in Australia by the end of 2029 to boost computing and artificial intelligence capacity, betting on growing demand for the technology in the country.
The U.S. tech giant's latest investment reflects rising demand for AI technologies and positions Australia as a key growth market.
Microsoft said the investment will support the expansion of its Azure AI supercomputing and cloud infrastructure, strengthen cybersecurity and promote AI skills development across the country.
"Australia has an enormous opportunity to translate AI into real economic growth and societal benefit," Microsoft CEO Satya Nadella, currently visiting Sydney as part of the company's global AI tour, said in a statement. He described the initiative as Microsoft's largest investment in Australia to date.
Microsoft and its Big Tech rivals Alphabet, Amazon and Meta will collectively invest about $650 billion to scale up AI-related infrastructure this year, according to Bridgewater Associates.
"This is a serious vote of confidence in Australia as a tier-one AI market," eToro Analyst Josh Gilbert said.
"For a long time, the AI capex conversation has been a U.S. story, with occasional nods to Japan, Singapore, and even the Middle East. The fact that Microsoft is now putting this kind of capital behind Australia, alongside similar moves across the globe, shows the region is squarely in the AI build-out plan," Gilbert added.
The investment also comes at a time when Microsoft faces growing competition in AI assistants, with its Copilot tool competing against offerings such as Anthropic's Claude and Google's Gemini. The Windows maker has been racing to improve Copilot to drive better adoption.
Microsoft also announced plans to expand its commercial cloud and AI, including graphics processing unit offerings, for Australian customers by more than 140% by the end of 2029.
For Microsoft, the investment "is about defending Azure's turf, locking in enterprise customers, and buying distribution in a market where the AI race is still wide open," eToro's Gilbert added.
The latest commitment builds on Microsoft's A$5 billion investment in 2023 aimed at expanding its hyperscale cloud computing and AI infrastructure in Australia.
"More training, better technology and new opportunities for Australians to get ahead. That's what the massive AI investment Microsoft announced today will mean for Australia," Prime Minister Anthony Albanese said in a post on X.
The Australian government welcomed the announcement, and said it will collaboratewith Microsoft to forecast infrastructure needs and strengthen the country's energy systems.
($1 = 1.3966 Australian dollars)
(Reporting by Fabiola Arámburo in Mexico City; Editing by Sherry Jacob-Phillips)
