Microsoft Boosts Data Centers, Debuts Maia 200 AI Chip Before Earnings

This article first appeared on GuruFocus.

Microsoft Corp. (MSFT, Financials) is ramping up its artificial intelligence infrastructure ahead of its fiscal second quarter earnings report, winning approval to build 15 additional data centers in Mount Pleasant, Wisconsin, while launching its second-generation AI chip, Maia 200.

Microsoft’s largest data center project, worth over $13 billion, will expand its 9 million square foot facility. Cloud and AI services for OpenAI and other enterprise clients will be supported by the expansion.

Maia 200 is aimed for faster, more efficient AI inference. Built on Taiwan Semiconductor’s 3 nanometer technology, the chip has over 100 billion transistors and can perform up to 10 petaflops in FP4 mode, three times faster than Amazon’s Trainium3 and more efficient than Google’s TPU v7.

Due to robust Azure Cloud growth, analysts predict Microsoft to deliver adjusted earnings per share of $3.91 on $80.3 billion in revenue, up 21% and 15% year over year.

Microsoft shares have up 8.2% in the past year, and analysts have a Strong Buy rating and an average price target of $618.85, meaning 32% upside.