Data Centers

What Are Data Centers?

Data centers are specialized facilities that house the computing infrastructure — servers, storage systems, networking equipment, and increasingly GPUs — that power the modern digital economy. Once primarily associated with enterprise IT and web hosting, data centers have become the critical physical layer underpinning artificial intelligence, cloud computing, online gaming, and the emerging agentic web. Global capital expenditure from the largest data center operators is approaching $750 billion in 2026, with tech giants Alphabet, Amazon, Meta, and Microsoft alone deploying more than $650 billion. Nearly 100 GW of new data center capacity will be added between 2026 and 2030, effectively doubling the world's installed base and expanding the sector at a 14% compound annual growth rate.

The AI Infrastructure Supercycle

The explosion of generative AI and large language models has fundamentally reshaped data center design. Traditional facilities optimized for general-purpose compute are giving way to AI-first architectures built around dense clusters of accelerators such as NVIDIA's H100, B200, B300, and the forthcoming Vera Rubin platform. Individual rack power density has surged from 10–14 kW to over 100 kW, making advanced liquid cooling systems imperative rather than optional. The data center industry is also undergoing a critical workload shift: inference — running trained AI models to generate outputs — now accounts for roughly half of all AI compute and is projected to reach two-thirds by the end of 2026, overtaking training as the dominant AI workload. This shift is driving a new tiered architecture where inference nodes at the edge handle simpler tasks while centralized facilities manage compute-intensive training and complex model operations.

Power, Energy, and Sustainability

Data centers consumed approximately 2% of global electricity in 2024, and the International Energy Agency projects consumption will reach 1,000 TWh by 2026 — equivalent to Japan's entire annual electricity usage. Goldman Sachs Research expects data center power demand to rise 165% by 2030 compared to 2023 levels. This staggering energy appetite is creating grid constraints that threaten to curtail growth, prompting operators to explore behind-the-meter generation, integrated battery storage, and nuclear power. Small modular reactors (SMRs) have attracted particular interest: Microsoft has hired a global SMR strategist, Amazon Web Services is exploring nuclear-powered cloud campuses, and more than 40 GW of SMR capacity is being positioned globally for hyperscalers and digital infrastructure operators. SMR waste heat at 300°F can drive absorption chillers, achieving 85% total efficiency in combined heat-and-power configurations versus 33% for electricity-only setups.

Semiconductors and the Supply Chain

The data center boom is placing extraordinary pressure on the global semiconductor supply chain. High-bandwidth memory (HBM) chips essential for AI training and inference are energy-intensive to manufacture, and memory vendors are prioritizing higher-margin HBM production over conventional DRAM and NAND — driving up prices across the board. Estimates suggest the United States alone would need to purchase 90% of global semiconductor manufacturing output over the next five years to support all announced data center capacity coming online by 2030. Average global data center construction costs have risen from $7.7 million per MW in 2020 to an estimated $11.3 million per MW in 2026, reflecting both supply chain constraints and the higher complexity of AI-optimized facilities.

Data Centers and the Agentic Economy

As AI agents become more autonomous — handling tasks from customer service to software development to real-time game world management — data centers become the operational substrate of the agentic economy. Agentic workloads demand low-latency inference at scale, persistent memory, and the ability to orchestrate millions of concurrent agent sessions. This is accelerating investment in edge data centers positioned closer to end users, hybrid architectures that span public cloud and on-premises deployments, and purpose-built inference platforms. The convergence of AI, spatial computing, virtual worlds, and autonomous agents means that data centers are no longer just back-end infrastructure — they are the foundational engine of next-generation digital experiences, from immersive metaverse environments to real-time simulation and digital twins.