U.S. data center spending hits record $40B as AI drives 30% growth

U.S. data center spending reached a record $40 billion in June, marking a 30% year-over-year increase driven primarily by artificial intelligence and machine learning infrastructure demands. This unprecedented investment surge reflects how AI expansion is reshaping digital infrastructure, with tech giants like Microsoft, Amazon, and Alphabet leading massive facility buildouts while raising critical questions about electricity grid capacity and sustainability.

What you should know: The data center construction boom represents the largest infrastructure investment wave in the sector’s history, with AI serving as the primary catalyst.

• Spending jumped from a 50% increase in 2024 to 30% growth in 2025, according to Bank of America Institute data.
• Tech companies including Microsoft, Alphabet, and Amazon are investing heavily in new and expanded facilities to meet AI computing demands.
• Nvidia, a leading chip manufacturer, has emerged as a key beneficiary, with its GPUs widely used in AI training and inference applications.

Market conditions: North American data center markets are experiencing unprecedented supply constraints despite record development activity.

• Colocation vacancy rates have plummeted to just 2.3%, even as installed capacity rose to 15.5 GW, according to JLL’s midyear 2025 report.
• JLL, a commercial real estate firm, warns the market has reached a “critical tipping point” where soaring demand, limited power, and lengthy build timelines are forcing strategic pivots.
• Cloud providers drove 65% of leasing activity in the first half of 2025.

Geographic distribution: Northern Virginia maintains its dominance as the nation’s data center hub, but other markets are rapidly expanding.

• Northern Virginia leads with 5.6 GW of capacity—over three times Dallas-Fort Worth’s 1.5 GW.
• Current planned development totals 31.6 GW, led by Northern Virginia (5.9 GW), Phoenix (4.2 GW), Dallas-Fort Worth (3.9 GW), and Las Vegas/Reno (3.5 GW).

Looking ahead: Industry analysts project massive continued investment through the decade, but infrastructure challenges loom large.

• JLL forecasts up to $1 trillion in North American data center investment from 2025–2030, with more than 100 GW of potential capacity delivery.
• Rising electricity demand from AI data centers, combined with electric vehicles, industrial reshoring, and building electrification, is expected to challenge utilities and policymakers.
• The rapid growth is forcing a rethink of strategies around balancing infrastructure needs with sustainability and grid reliability.