Microsoft Corp. (NASDAQ:MSFT) is accelerating its expansion in Europe with a $10 billion data center project on Portugal’s Atlantic coast, a move that could reshape the continent’s digital landscape. The development, located in Sines—about 150 kilometers south of Lisbon—marks one of Microsoft’s largest European commitments this year. Company president Brad Smith announced the investment at the Web Summit in Lisbon, highlighting Microsoft’s determination to meet the surging global demand for AI computing capacity.
The project, developed in partnership with Portugal’s Start Campus and UK-based Nscale, will strengthen Microsoft’s global cloud infrastructure and establish another key node in its fast-growing AI network. The initiative underscores the company’s strategy to build data centers close to renewable energy sources and submarine cables that facilitate high-speed global connectivity.
A cornerstone in Microsoft’s European expansion
The Sines complex represents the latest phase of Microsoft’s multi-year capacity buildout across Europe. The company has already opened the first of six planned buildings and secured long-term leases for additional computing space. With AI workloads intensifying worldwide, Microsoft has been forming alliances with neocloud providers such as CoreWeave and Nebius, while also planning to lease capacity from Nscale in Norway and the UK.
The objective is to ensure enough high-performance infrastructure to sustain the rapid growth of generative AI applications, which require immense processing power and data storage. If fully realized, the Sines project could become a critical artery in Microsoft’s European AI ecosystem, enhancing its ability to deliver Azure, Copilot, and OpenAI services with lower latency and higher efficiency.
Portugal’s leap into the digital economy
For Portugal, the Sines investment is far more than another technology park—it marks the beginning of a national digital transformation. The coastal town, home to roughly 15,000 residents, occupies a strategic position on transatlantic undersea cable routes linking Europe with Brazil and Africa. A new extension from Google will soon connect Sines directly to South Carolina, further increasing its connectivity advantage.
The region is emerging as a magnet for advanced industries. Beyond Microsoft’s data center, China’s CALB Group is building a $2 billion battery plant nearby, and the European Union has proposed locating a large-scale AI “gigafactory” in the area. The combination of digital infrastructure and industrial investment could establish Sines as one of Europe’s next-generation energy and technology hubs.
Strategic implications for Europe’s AI landscape
Microsoft’s commitment aligns with its broader vision to expand AI infrastructure in regions with strong renewable energy potential and political stability. By anchoring its operations in Portugal, the company positions itself at the intersection of Europe’s green energy transition and its drive to achieve technological sovereignty. The project also reflects Europe’s growing role in the global AI race, as governments and corporations invest heavily to reduce reliance on U.S. and Asian data ecosystems.
As Microsoft continues to roll out its AI infrastructure, the Sines project could serve as a blueprint for sustainable, interconnected data center development across the continent. It represents not only a major step for the company but also a turning point for Portugal’s role in the digital economy—transforming the nation from a peripheral market into a key link in the global AI chain.
