Microsoft, Alphabet throw more cash on the AI bonfire
- Reference: 1762192819
- News link: https://www.theregister.co.uk/2025/11/03/tech_firms_continue_to_burn/
- Source link:
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.
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Announcing the move in a [2]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."
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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.
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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.
[6]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.
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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 [8]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 [9]$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 [10]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. ®
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[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aQk0CRC6JDRJmtF5MO-ogwAAAAU&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://blogs.microsoft.com/on-the-issues/2025/11/03/microsofts-15-2-billion-usd-investment-in-the-uae/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aQk0CRC6JDRJmtF5MO-ogwAAAAU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aQk0CRC6JDRJmtF5MO-ogwAAAAU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aQk0CRC6JDRJmtF5MO-ogwAAAAU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://iren.gcs-web.com/static-files/0aea9298-ac5b-4a57-9615-5a2298010a88
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aQk0CRC6JDRJmtF5MO-ogwAAAAU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://www.bloomberg.com/news/articles/2025-11-03/alphabet-to-sell-at-least-3-billion-bonds-to-fund-ai-expansion
[9] https://www.theregister.com/2025/10/31/meta_launches_30_billion_bond/
[10] https://www.theregister.com/2025/10/28/forrester_ai_spending/
[11] https://whitepapers.theregister.com/
Re: Nobody is going to pay that much to use this.
One wonders what the risk built into Google's bond price. OK you say Google is too big to go broke. But not big enough to be 'restructured' should or when AI goes pear shaped. They could get dumped into junk bond status.
Hence - not buyin'
Re: Nobody is going to pay that much to use this.
They have 30 year USD bonds yielding about 5.25%, that's impressive for a 'tech company'. More in line with what you'd expect from a safe-as-houses utility: https://markets.businessinsider.com/bonds/alphabet_incdl-notes_202525-55-bond-2055-us02079kam99
US Federal 30 year bond is only ~0.6% lower, for context.
Right now they have way more cash than debt - without digging much I'd guess the debt issue is more about acquiring cash in the right jurisdiction and avoiding those pesky repatriation taxes. But like you say things can change, and 30 years is a long time. With high margins and fingers in several big pies pretty much the only thing they can do to seriously jeopardise the company is over-leverage so I'd watch this trend carefully if I were long. I doubt AI itself will damage them much though. Meta pissed away, what was it... USD 15bil? on VR without blinking, and that was a couple years back now. Alphabet could do 10 times that easy.
However I think the biggest losers are going to be those non-tech savvy customers signing long contracts for vague AI services to be delivered by the big tech companies. The public sector particularly.
Who knows maybe AI will finally be the straw to break MS's back.
Don’t tease
Maybe Windows 11 will be the last version. It's just a typical 'off by one' error.
The next version is Windows for Copilot.
It'll be so difficult to find your way around that you'll also need a navigator.
I might be being stupid here but are Texas and the UAE really a good choice for compute that needs to cooled?
No, but neither give a shit about environmental damage or human rights, so are a perfect match for an industry built on pure greed with only a superficial veneer of ethics.
"I might be being stupid here but are Texas and the UAE really a good choice for compute that needs to cooled?"
Perhaps not, but UAE has a long history of acting to bypass Western sanctions, whether its Western arms to embargoed regimes, machinery to Iran, or aircraft parts to keep Boeing and Airbus jets flying in Russia. So I'm guessing the relevant cooling climate for GPUs shipped to the UAE would be mid-latitudes China.
Gadarene swine motivated by expectations from demonic spirits of avarice?
The players in this game to invest US dollars before they lose purchasing power (against commodities), expect to consolidate huge structures for 'AI' computing, these fed by immense electricity supplies which also will be under their ownership. That is a natural consequence of 'bigger is better' and 'centralisation begets monopolistic powers'.
It is predicated upon businesses happily tapping into external 'AI' supplies instead of commissioning bespoke, and much smaller, 'AI' software and hardware to run locally. Just as most enterprise is entrapped by Microsoft Windows and 'office software', so shall be users of 'AI'. A similar tactic of offering freebies to educational establishments and students will cement dependency.
Even after expectations from 'AI' settle to realistic levels, the major providers of 'AI', these seemingly in cahoots via joint ownerships, will be sitting prettily; at least in the West, for the time being. That's the theory.
On the other hand , this looks set to go 'mammary glands up' along with the US economy (plus knock-on to Europe).
Nobody is going to pay that much to use this.
Basic economics. It is a bubble, not the next big thing. They are spreading the damage by getting others to invest, so it will be interesting to see who wants to commit economic suicide on the altar of Fomo, the God of Tech scams.