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.