02.14.2025

ForwardThinking

The great data center building boom of 2025

I had the distinct pleasure of spending part of the week at boldstart Founder’s Day in Miami. In addition to being a nice respite from the cold and dreariness of the Massachusetts winter, it was also a time to hang out with a group of founders in the boldstart portfolio and bask in their energy, creativity and drive.

If you could bottle that energy, maybe it would help power the profusion of data centers that the biggest tech companies want to build in 2025. If you haven’t heard, it’s just a mind-boggling investment in compute power with $100 billion each expected from Amazon and OpenAI, $80 billion from Microsoft, $75 billion from Google and $65 billion from Meta – $420 billion, all in the name of finding the resources to run the generative AI revolution.

That’s a lot of building, but these companies can’t seem to get enough. The cloud infrastructure vendors in particular – Amazon, Microsoft and Google – have a real capacity problem right now. They have more customer demand than they have the data centers to fill it.

As I’ve noted previously, that would seem to be a good problem to have unless customers begin looking elsewhere while these massive construction projects play out. It’s not as though you can magically snap your fingers, and have the land, permits, supplies and construction crew appear in front of you. It takes time.

Heck, we’re trying to do a kitchen renovation in my house, and that’s moving way slower than my wife and I would like. Just getting out the design phase and finding contractors is proving challenging. And a kitchen is a pretty well understood project. I don’t imagine just anyone can manage a data center construction project.

Nonetheless, John Dinsdale, chief analyst and managing director at Synergy Research Group, who covers all things cloud, thinks it’s an achievable goal, but he believes these numbers aren’t just about the data center construction, at least in the pure sense. Much like our construction project where a lot of the cost is the cabinets and the countertops, there are a lot of supplies outside of the building itself when it comes to creating data centers.

“They also cover things like distribution networks, transport, warehousing, HQ/office facilities, non-data center IT, manufacturing, retail outlets, etc. But the majority of the Capex is directed at data centers, and those numbers will spike in line with the announced Capex increases,” Dinsdale told FastForward.

He says for those data centers that will be built this year, the projects are likely under way and he believes that the limiting factors won’t be the construction and the concrete, so much as the power supply and the GPUs (and possibly spiraling costs).

I don’t know if those will be the only things that will hold up these projects. Experience and my own cynical nature suggest that if you’re undergoing massive construction projects, some of them will be delayed for any number of reasons, whether local bureaucracy, supply chain issues or trouble finding enough plumbers, electricians and other skilled labor. Just because you have the money ready to spend doesn’t mean it will happen. Those of us attempting to remodel our kitchens know otherwise.

-Ron

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News of the week

Workday launches ground breaking tool to manage AI agents

One of the many issues around implementing AI agents at scale is how you are going to manage them as they work beside humans. Workday, the SaaS HR platform, got ahead of the market this week with the launch of 'The Agent System of Record.'

It might not be the most imaginative name, but it is an important first step in figuring how to track agents as they perform work inside large organizations. "The workforce is expanding. It's no longer just human workers. It's now digital workers as well, and we need to have a unified platform that manages your entire workforce going forward," Workday CEO Carl Eschenbach said at a press event announcing the new tool.

Ray Wang, founder and principal analyst at Constellation Research also sees a future where AI agents and human employees work side by side. "Every organization has to figure out how to simultaneously manage their agents and humans. We’re at the beginning of this revolution. What Workday is proposing makes it a lot easier to get started," Wang told FastForward.

AMD outsells Intel in data center for first time

When AMD reported earnings last week, perhaps the biggest surprise was that the company announced it outsold Intel in data center chips for the first time ever. It is perhaps more of a reflection of the troubles Intel is having at the moment competing in just about every aspect of the market.

Meanwhile AMD grew at a brisk 69% year over year and 9% over the prior quarter, but it wasn't all sunshine and puppies for the chip maker. Tom's Hardware reports they missed on data center GPUs where Nvidia continues to dominate. They were also soft in gaming and in embedded units, but the company had a big win in their desktop market with revenue up 58% YoY in that segment, and overall beat expectations, per CNBC.

Sailpoint returns to public markets

As the IPO action continues to be sluggish, identity management firm, SailPoint returned to the public markets this week with a pre-IPO valuation of $12.6 billion. The company went public at $23 a share.

But it's important to note this isn't a startup getting ready to begin its public life for the first time. SailPoint originally went public in 2017, only to be taken private by Thoma Bravo in 2022 with a valuation of $6.9 billion at the time, giving the firm a tidy return on its investment with the new valuation.

Another way this isn't a typical IPO is that Thoma Bravo maintains tight control over the firm, in spite of its public status, with an 88% ownership stake.

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“I can tell you this evening, Europe is going to speed up, France is going to speed up,” Macron said in a TV interview, per TechCrunch. France boasts startup Mistral, which raised $624 million in June on a $6.2 billion valuation. While that might seem like a lot, U.S.-based Anthropic is valued at $60 billion and OpenAI as much as $260 billion.

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- Fei-Fei Li at Artificial Intelligence Action Summit in Paris, as reported by TechCrunch

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ForwardThinking

The great data center building boom of 2025

What's new on the blog

Shopify's Andrew Dunbar runs a tight ship to keep millions of merchants safe

Generative AI has changed the very nature of how we think about data

How Belinda Neal helps keep Goldman Sachs’ engineering team on track

Here’s what’s holding back your generative AI project

News of the week

Workday launches ground breaking tool to manage AI agents

AMD outsells Intel in data center for first time

Sailpoint returns to public markets

EU fights for a piece of the AI action with massive new investments

What we're reading

CSO

Cybersecurity needs women — and it needs to treat them better

Bloomberg

The Unicorn Boom Is Over, and Startups Are Getting Desperate

CIO Dive

Workers worry over AI agent accuracy, quality

ZDNet

How fake security reports are swamping open-source projects, thanks to AI

Look who's talking

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FastForward #9: The great data center building boom of 2025

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