Microsoft, Alphabet throw more cash on the AI bonfire

The spending will continue until ROI improves

Tech companies continue to sling crazy amounts of money at AI, with Microsoft announcing deals worth billions in Texas and the United Arab Emirates (UAE), while Google parent Alphabet is selling bonds in Europe to raise cash for more AI expansion.

Microsoft declared on Monday that it will spend more than $7.9 billion on infrastructure for its AI strategy in the UAE from the start of 2026 to the end of 2029.

The Redmond firm says that this will comprise more than $5.5 billion in capital expenses for expansion of its AI and cloud infrastructure, including new steps it plans to disclose in the UAE capital Abu Dhabi later this week, plus $2.4 billion in planned local operating expenses.

Announcing the move in a blog post, Microsoft President Brad Smith noted that: "On some days, it feels like the tech sector is gripped in a rhetorical race to announce ever larger, sky-high numbers."

He added that: "We believe in moving fast while staying grounded and being transparent about our investment details. And we want to share our strong conviction that our investments benefit the shareholders of our company, the people of the UAE, and the relationship between our two nations."

Smith claimed that Microsoft was the first company under the current Trump administration to secure export licenses from the Commerce Department to ship GPUs to the UAE. These were approved in September, and permitted the firm to ship advanced GB300 GPUs that Microsoft says are "equivalent" to 60,400 A100 chips.  

The global cloud giant also signed a GPU services contract with AI cloud provider Iren Limited, said to be worth $9.7 billion over five years.

Iren says [PDF] the GPUs are set to be deployed in phases through 2026 at its campus at Childress, Texas, in conjunction with the delivery of new liquid-cooled datacenters that will together support 200 MW of IT infrastructure.

"This agreement not only validates Iren's position as a trusted provider of AI Cloud services, but also opens access to a new customer segment among global hyperscalers," Co-Founder & Co-CEO Daniel Roberts declared.

Microsoft's President for Business Development and Ventures Jonathan Tinter said that Iren's expertise in building and operating a fully integrated AI cloud combined with the firm's secured power capacity made it a strategic partner.

Elsewhere, Google's parent Alphabet is reported to be selling bonds in order to raise more funding necessary to support its bumper spending spree on AI infrastructure.

According to SEC filings previously reported by Bloomberg, the company is marketing six euro-denominated benchmark tranches, with the total sale expected to bring in at least €3 billion ($3.5 billion). It's also selling eight tranches of bonds worth up to $15 billion in the US. It is said to be Alphabet's second such sale this year, with the first bringing in €6.75 billion ($7.8 billion). Last week, Facebook parent Meta floated $30 billion in bonds to build out its own AI infrastructure portfolio.

All of this frenzied activity is despite many having misgivings about AI. Research firm Forrester, said recently that AI is set to face a reckoning, with large organizations set to defer AI spending because the gap between vendor promises and the value delivered to enterprises is widening. ®