“Australia has an enormous opportunity to translate AI into real economic growth and societal benefit,” Nadella said.

“That is why we are making our largest investment in Australia to date, committing $25 billion to expand AI and cloud capacity, strengthen cyber security, and expand access to digital skills across the country.”

The funds will be spent over a period of three years with the aim of expanding Microsoft’s Azure AI infrastructure across the country.

In addition, Microsoft will expand the Microsoft–Australian Signals Directorate Cyber Shield partnership and train 3 million Australians with “workforce-ready AI skills” by 2028. The company said it had already passed its previous goal – to train 1 million individuals across the ANZ region by the end of 2025 – ahead of time.

The overall investment is supported by a memorandum of understanding between Microsoft and the government based on five national priorities: supporting the country’s national interest, driving clean energy transition, water sustainability, investing in local skills and jobs, and boosting Australia’s research and innovation capability.

Prime Minister Albanese said his government’s goal is “to make sure all Australians benefit from AI”.

“Our National AI Plan is all about capturing the economic opportunities of this transformative technology while protecting Australians from the risks,” Albanese said.

“Microsoft’s long-term investment in our national capability will help deliver on that plan – strengthening our cyber defences and creating opportunity for Australian workers and businesses.”

Belinda Dennett, chief executive of Data Centres Australia, called Microsoft’s investment “a significant vote of confidence in Australia as a hub for AI infrastructure investment and data centre development”.

“This investment in new digital infrastructure provides Australia with the opportunity to benefit from and to lead in the most profound technological shift we have ever seen,” Dennett said.

“It will enable digital services for Australians and capture more of the AI value chain locally, supporting high-skilled jobs and playing an important role in the energy transition.”

Where will the money go?

New data centres appear to be a key feature of Microsoft’s latest round of infrastructure investments, and while some of that spending will no doubt stay on shore, much of it will rely upon purchasing hardware not made in Australia.

According to a 2025 report by management consulting firm McKinsey & Company, the bulk of any given data centre’s cost is sunk into silicon and computing hardware such as GPUs.

Since Australia does not have sovereign capacity in this area, the bulk of Microsoft’s $25 billion will likely end up in the hands of chipmakers such as NVIDIA.