At-a-glance

  1. AI is driving enormous increases in demand—and massive densification.
  2. Cloud keeps growing, too.
  3. Cloud providers are building new availability zones.
  4. Meeting new demand requires a huge amount of capital, which is now more expensive.
  5. Operators are kicking their sustainability efforts into high gear.
  6. Supply chain constraints are easing...
  7. . ... but power is increasingly constrained.
  8. Souring public sentiment has made it more difficult to get approval to build.
  9. Data center operators are looking to new power and cooling technologies.
  10. Data center operators are designing to meet today’s needs – and tomorrow’s.

1. AI is driving enormous increases in demand—and massive densification.

Artificial intelligence (AI) workloads, such as machine learning and natural language processing, are exceptionally computationally intensive. Training sophisticated AI models like GPT-4 can require thousands of specialized processors running for weeks. As AI proliferates across industries, the need for infrastructure to support these workloads is skyrocketing.

In a single 90-day period in 2023, end users in the U.S. signed data center leases totaling a staggering 2.1 GW, according to research by TD Cowen.1 That’s about 20 percent of the size of the entire third-party U.S. data center market. Data center capacity is set to more than triple by 2030, and AI could drive data center demand up much more than that. (Dell CEO Michael Dell predicts that AI will drive a 100x increase in data center demand over the next 10 years.)2

In parallel, AI is pushing data center density to new heights. The Graphics Processing Units (GPUs) and other accelerators used for AI are far more power-hungry than traditional CPUs, often consuming over 1000W per chip. AI racks can require 50-100kW, compared to 5-10kW for typical enterprise workloads. This means data centers must provide significantly more power and cooling capacity per square foot to keep up with AI demands. As next-generation AI training hardware rolls out to support even larger and more sophisticated models, data center operators will be challenged to deploy ultra-high density racks at scale.

1 Source: TD Cowen. “A TSUNAMI OF AI DEMAND HITS THE DATACENTER MARKET,” July 24, 2023.
2 Source: Data center dynamics. “AI to drive data center demand up 100x over next 10 years,” March 2024.

The data center market is experiencing rapid growth. Here are 10 trends propelling the data center economy and the reasons we believe investors should consider including them in their portfolios. Read our full perspective.

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MM13968 | 04/2024 | 3551815-122025

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