Global data center spending is set to skyrocket in 2025, with capital expenditures projected to surge 25.8% to $598 billion. This marks the largest investment cycle in the industry’s history, fueled almost entirely by the insatiable demand for artificial intelligence infrastructure.
AI at the Heart of Explosive Growth
Hyperscale cloud providers are leading the spending spree, with combined expansion plans topping $320 billion. Artificial intelligence has fundamentally changed the requirements for data centers: it drove over 50% growth in the U.S. data center market in 2024 and is expected to keep pushing capacity needs higher.
The scale of the shift is staggering: AI-specific infrastructure is on track to require $5.2 trillion globally in capacity expenditures. Demand for AI capacity alone is forecast to climb at an average of 33% per year from 2023 through 2030, with advanced AI workloads projected to account for around 70% of total data center demand by 2030.
Power, Cooling, and Performance: Infrastructure Transformation
Meeting AI’s needs is reshaping every aspect of data center design:
- Power Density: Average rack power density has jumped from 20 kW historically to 36 kW in 2023 and is expected to hit 50 kW by 2027.
- Cooling: Advanced and liquid cooling solutions are moving mainstream to handle the massive heat loads from AI hardware.
- Performance: High-performance computing capabilities for AI training and inference are driving the need for ever-faster, denser, and more power-hungry servers.
Market Projections Through 2030
Global data center capacity demand is expected to grow 19% to 22% annually, rising from 55 GW in 2023 to 219 GW by 2030. Server investments will dominate, making up 51% of all data center spending in 2025, with a projected 33.5% year-over-year growth.
The semiconductor segment will be a major cost driver: out of a forecasted $1 trillion in total data center CapEx by 2028, $500 billion will go toward semiconductors—representing roughly half of equipment spending going into silicon.
Infrastructure Bottlenecks Threaten Expansion
Despite aggressive spending plans, the industry faces severe obstacles:
- Power Grid Constraints: Connection requests between 300 MW to 1,000 MW are straining utilities beyond capacity.
- Construction Delays: Building new facilities now takes 3-5 years, while interconnection timelines stretch 2-4 years.
- Supply Chain Issues: Equipment shortages and pricing volatility are hampering deployments.
PiperSandler Research captured the market tension well: “Management indicated they had never seen a mismatch where the demand for data centers is so much greater than the supply.”
Regional Growth: Asia Races Ahead, North America Dominates
Asia Pacific is seeing the fastest capacity growth, accounting for 27.1% of global live IT capacity. North America remains the largest market at 46.4%, with Europe at 19.6%.
Conclusion: A Historic Investment Cycle Unfolds
The convergence of AI adoption, cloud migrations, and digital transformation initiatives is triggering a historic data center buildout. 2025 is poised to be a turning point, setting the pace for capacity expansion worldwide and transforming the landscape of digital infrastructure for years to come.