Microsoft announced a $10 billion investment to build a new artificial‑intelligence data center in the coastal town of Sines, Portugal. The facility will be part of the company’s broader $80 billion AI data‑center expansion plan, which aims to increase total AI capacity by more than 80% this year and double its data‑center footprint over the next two years.
The Sines hub will be built in partnership with Portuguese developer Start Campus and British startup Nscale, and will host 12,600 next‑generation NVIDIA GPUs. The site is chosen for its proximity to undersea cables that link Europe to Africa and the Americas, its abundant renewable‑energy supply, and its favorable climate for cooling. Microsoft’s president, Brad Smith, said the location “helps position Portugal as a benchmark for the responsible and scalable development of AI in Europe,” highlighting the country’s cheaper energy, strong broadband connectivity, and commitment to carbon neutrality.
Strategically, the investment strengthens Microsoft’s AI‑first strategy by expanding Azure AI’s compute capacity and ensuring that AI workloads can be kept within EU borders to meet tightening data‑sovereignty regulations. The new hub will support the growing demand for Azure AI services, which have seen rapid adoption across enterprise, government, and research sectors. By adding high‑performance compute in Portugal, Microsoft can reduce latency for European customers and capture a larger share of the continent’s AI workload market, where competitors such as Google and Amazon are also expanding their European footprints.
The move also has broader economic implications for Portugal. The project is expected to create hundreds of high‑skill jobs, boost the local tech ecosystem, and reinforce the country’s position as a digital hub in Southern Europe. Microsoft’s focus on renewable energy for the data center aligns with its global sustainability goals, reinforcing its commitment to carbon neutrality and responsible AI development.
Market reaction to the announcement was muted, with Microsoft’s shares experiencing a slight dip in pre‑market trading. Analysts noted that while the investment signals strong confidence in AI growth, the capital outlay is a short‑term drag on earnings. Nonetheless, the announcement was viewed positively as it underlines Microsoft’s leadership in AI infrastructure and its proactive stance on data‑sovereignty issues.
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