“Record Carbon Deal Signed” as Microsoft (MSFT) Buys Soil Credits to Offset AI Emissions

Microsoft (MSFT) has agreed to a record deal to buy soil carbon credits as it works to offset rising emissions from its fast-growing data center and AI business. Under the agreement, the company will purchase 2.85 million credits from Indigo Carbon over 12 years. While Microsoft did not share the price, the deal is estimated to be worth between $171 million and $228 million based on carbon credit prices.

AI Growth Adds Pressure to Meet Climate Goals

The agreement comes as Microsoft’s energy use continues to rise, driven by demand for cloud services and AI tools. At the same time, the company has committed to becoming carbon negative by 2030, meaning it plans to remove more carbon from the atmosphere than it produces.

To meet that goal, Microsoft has become the world’s largest buyer of carbon removal credits. The Indigo deal is now its biggest soil-based purchase to date.

How the Credits Work

The credits are tied to regenerative farming in the U.S., where practices such as reduced tilling and cover crops help soil store carbon. Indigo works with farmers to measure carbon captured in the soil and sell credits based on verified results.

Farmers receive about 75% of the value of each credit, giving them a steady source of income while improving soil health.

Carbon Markets under Scrutiny

Supporters of carbon removal say these projects are needed to offset emissions that companies cannot reduce quickly, especially as energy use rises. However, Critics argue that it is hard to measure how much carbon is truly removed and how long it stays locked in the soil.

Despite those concerns, demand continues to grow. Market data firm Sylvera said interest in soil carbon credits increased last year, driven in part by large technology companies looking to meet climate targets.

The latest deal shows Microsoft is willing to spend heavily to meet its climate goals as AI scales up. While the costs are meaningful, the move may help reduce long-term regulatory and reputational risks tied to emissions.

Is Microsoft a Buy, Hold or Sell? 

Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 32 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 10.41% rally in its share price over the past year, the average MSFT price target of $631.36 per share implies 37.4% upside potential.

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This article was written by Shalu Saraf and reviewed by Gilan Miller-Gertz.