Huaxin Securities: Global AI competition intensifies, Microsoft Corporation (MSFT.US) takes the lead with an investment of 80 billion dollars.

Huaxin Securities released a research report stating that Microsoft Corporation (04338, MSFT.US) is confident in the development of AI, increasing its capital expenditure on AI infrastructure. Its cloud and AI businesses have greater upside potential. Further improvement of the business ecosystem and deep integration of AI technology are expected to drive the company's long-term growth. In addition, the leading position of tech giants in the field of AI and cloud computing is expected to support their steady growth in the future. Event: On January 3, 2025, Microsoft Corporation announced in an official blog that in the 2025 fiscal year, the company plans to invest approximately $80 billion to build AI-supporting data centers for training AI models and deploying AI and cloud-based applications globally. Key points from Huaxin Securities: Continued expansion of capital expenditure, ongoing AI infrastructure construction On January 3, Brad Smith, President of Microsoft Corporation, announced that the company plans to invest $80 billion in the 2025 fiscal year to build AI intelligence centers to support AI training and deployment, as well as cloud-based application services. Smith stated in his article, "A new generation of AI companies is emerging, with each company leveraging the rapid development of AI models and chips, turning to Graphic Processing Units (GPUs) and AI accelerator chips. Across the entire economy, software programs are being redesigned to run as applications that support AI. These advancements would not be possible without the establishment of new partnerships based on large-scale infrastructure investments, which are critical foundations for AI innovation and usage." According to Microsoft Corporation's first fiscal quarter report for the 2025 fiscal year released in October 2024, the company's capital expenditures in that quarter reached $20 billion, a year-on-year increase of 78.57% and a quarter-on-quarter increase of 5.26%. Microsoft Corporation stated at the earnings conference that the expansion of AI infrastructure drove the growth of Azure cloud business and DYNAM JAPANics 365 revenue, with capital expenditure on cloud and AI products increasing to meet the growing demands in the industry. Tech giants increase investments, Microsoft Corporation's capital expenditure continues to grow Morgan Stanley previously predicted that by 2025, tech giants Amazon.com, Inc., Alphabet Inc. Class C, Microsoft Corporation, and Meta would collectively invest approximately $300 billion in capital expenditures, mainly to support the development of AI and massive language models. This massive investment plan highlights these companies' significant strategies in the field of AI-driven innovation. Among these companies, Amazon.com, Inc. and Microsoft Corporation are expected to have the highest spending, reaching $96.4 billion and $89.9 billion, respectively. Alphabet Inc. Class C and Meta's expected spending are $62.6 billion and $52.3 billion, respectively. According to research by Omedia, in 2024, Microsoft Corporation purchased AI chips from NVIDIA Corporation in quantities far exceeding other vendors including Meta, Amazon.com, Inc., Alphabet Inc. Class C, and others. In 2024, Microsoft Corporation bought over 500,000 units of H-series graphics cards, while the purchases by other vendors were only half of Microsoft Corporation's. According to research by technology intelligence company ABI Research, by the end of 2024, there will be 5,697 public data centers globally, mainly located in the Asia-Pacific region, Europe, and North America. By 2030, there will be 8,410 data centers in operation. Owners of mega data centers include well-known tech companies such as Microsoft Corporation (Azure), Amazon.com, Inc. (AWS), Alphabet Inc. Class C (GCP), IBM, Oracle Corporation, and Alibaba Group Holding Limited Sponsored ADR (Aliyun). Microsoft Corporation and Amazon.com, Inc. together occupy more than half of the existing mega data centers. Investment advice: Tech giants' leading positions in AI and cloud computing are expected to support their steady growth in the future. Investors can continue to focus on Microsoft Corporation (04338, MSFT.US) and Alphabet Inc. Class C-A (GOOGL.US). Risk warning: Research and development progress of large AI models is slower than expected; macroeconomic fluctuations leading to lower-than-expected market demand; sales performance of new AIPC products below expectations.