Microsoft Plans $10 Billion AI Data Center Investment in Portugal

Microsoft Corp. is set to invest $10 billion in a new artificial intelligence data center on Portugal’s coast one of its largest commitments in Europe this year, the company announced.

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The massive investment will fund a state-of-the-art data center complex in Sines, a coastal city located about 150 kilometers (93 miles) south of Lisbon. Microsoft is partnering with Start Campus, a Portuguese developer, and British startup Nscale to build out the project. Microsoft President Brad Smith first revealed the plans in an interview with local newspaper Jornal de Negócios during the Web Summit in Lisbon.

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A Microsoft spokesperson confirmed the $10 billion funding amount but declined to offer further details. Start Campus, meanwhile, said the figure reflects ongoing discussions for the next stage of the project’s expansion. The company opened the first of six planned buildings in March, marking an important milestone in the development of the massive data center park.

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Microsoft had already taken a major step toward the project earlier this year when it signed a multi-year lease for capacity at the Sines site in October. The move underscores the company’s effort to expand its computing infrastructure as global demand for AI services skyrockets.

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With capacity constraints emerging across major markets, Microsoft has been broadening its partnerships with several so-called “neocloud” providers firms specializing in high-performance cloud computing such as CoreWeave Inc. and Nebius Group NV. In addition, Microsoft plans to lease additional capacity from Nscale in both Norway and the United Kingdom to support its growing network.

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Sines, though modest in size with roughly 15,000 residents, is quickly transforming into a strategic technology hub for Portugal and Europe. The town’s location makes it a vital connectivity point, as it already hosts several undersea cables linking Europe to Brazil and Africa. Google is also constructing a new transatlantic cable from Sines to South Carolina, further cementing the region’s importance in global digital infrastructure.

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The area has been drawing attention from major international investors. Earlier this year, China’s CALB Group Co. began work on a €2 billion ($2.3 billion) battery factory in Sines a project that aligns with Europe’s push for energy independence and green technology.

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Additionally, Sines has been identified as the proposed site for an EU-backed artificial intelligence “gigafactory,” positioning the town at the forefront of Europe’s AI and energy innovation initiatives.

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Microsoft’s $10 billion investment adds yet another layer to the region’s rapid economic and technological development. The new data center is expected to bolster the company’s global AI infrastructure while creating jobs and supporting Portugal’s growing role in Europe’s digital economy.

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For Microsoft, this expansion is part of a broader strategy to strengthen its cloud and AI capacity worldwide. The company has been aggressively scaling its data center footprint to power its suite of AI tools and services, including those integrated with its Azure cloud platform and OpenAI’s large language models. With AI adoption accelerating across industries from finance and manufacturing to healthcare demand for computing power and cloud storage continues to rise sharply.

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The Sines project also highlights the increasing competition among major tech players to secure infrastructure in strategic locations with access to renewable energy and international data links. Portugal, with its favorable climate for green energy and strong digital infrastructure, has emerged as an attractive destination for these long-term technology investments.

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As Microsoft deepens its footprint in Europe, the Sines development could serve as a model for future AI-driven data hubs combining local partnerships, sustainable design, and global connectivity. The project underscores how the AI revolution is reshaping not only the digital landscape but also regional economies across Europe.

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