Tech giants Microsoft and Google are making major strides in Europe's artificial intelligence (AI) race, with both companies announcing landmark investments in data centers aimed at powering AI.

Microsoft said Tuesday it intends to invest $10 billion from early next year in a mega data center in Portugal dedicated to developing AI infrastructure.

The project, in partnership with British firm Nscale, which specializes in AI data centers, and with Start Campus, which has begun construction of a major data center near the southern port of Sines, will see Microsoft install 12,600 of Nvidia's latest-generation chips.

The company in a statement termed the scheme "one of the largest investments in AI computing capacity in Europe."

Microsoft President Brad Smith noted in an interview with the Portuguese business daily Jornal de Negocios that Portugal has emerged as a key European destination for data center construction and investment.

In addition to a data center powered by renewable energy, the Sines site has the advantage of being a link point for important submarine telecommunications cables linking the Americas to Europe.

Regarding data centers, "demand in the AI field, particularly over the last five months, has become quite crazy," Nscale's product director, Daniel Bathurst, told AFP.

For a player like Microsoft, "it's a race against time," he added.

Google's $6.4 billion investment in Germany

On the same day, Google unveiled its biggest-ever investment in Germany, pledging 5.5 billion euros ($6.4 billion) for a new data center and other projects.

The investments will be made by 2029, and Chancellor Friedrich Merz highlighted the strategic importance of these initiatives, saying "We are driving growth in Germany" and reinforcing that Germany is and will remain one of the most attractive investment destinations in the world.

Google's plans include a new data center and expansion of an existing center in the western state of Hesse, providing computing power for AI.

It also plans to expand its offices in Berlin, Frankfurt and Munich, and outlined various projects aimed at reducing its greenhouse gas emissions.

These included buying renewable wind and solar energy and a "heat recovery project" that would see excess heat produced by a data center reused by local residents.

The plans will support around 9,000 jobs a year in Germany, Google said.

(With input from AFP)