RACINE, Wis. — Microsoft said Thursday that it will spend $4 billion to build a second data center in Wisconsin. The first one will come online in early 2026, with the software company spending $3.3 billion on it.

The first Wisconsin data center will house hundreds of thousands of Nvidia Blackwell GB200 chips that are capable of handling artificial intelligence models, Brad Smith, Microsoft’s president and vice chair, said at a news conference.

Cloud infrastructure providers are racing to build capacity to meet the needs of companies that want to run AI models. More than 700 million people use OpenAI’s ChatGPT, which draws on Microsoft’s Azure cloud, and software providers from Adobe to Salesforce have been adding AI feature enhancements to woo customers.

Microsoft plans to match the amount of energy it consumes from fossil fuel sources with carbon-free energy it will contribute to the grid, Smith wrote in a blog post.

“We appreciate that energy prices are increasing across the country and have worked hard to ensure our data center will not drive-up costs for our neighbors,” Smith wrote. “That’s why we’re pre-paying for the energy and electrical infrastructure that we’ll use — ensuring prices remain stable and protecting consumers from future cost increases because of our data center.”

A solar farm that’s under construction 150 miles northwest of the data centers will contribute 250 megawatts of power.

The initial data center, built on land where Foxconn originally planned to built a manufacturing plant, will use as much water as a restaurant every year, with 400 permanent Microsoft employees, according to the blog post.

“It will deliver 10x the performance of the world’s fastest supercomputer today, enabling AI training and inference workloads at a level never before seen,” Microsoft CEO Satya Nadella wrote in an X post.

The second data center will be a similar scale as the first and will enter operation in 2027 or after that, Smith said.

“We did pause to think through exactly what we would build for phase two, how we would build it,” he said.

Earlier this week, Smith told reporters that the company has allocated $15.5 billion for additional infrastructure spending in the U.K. through 2028. Separately, Amsterdam’s Nebius Group said last week that Microsoft has agreed to spend up to $19.4 billion over five years to rent AI data center capacity.

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