Construction Spending on AI Data Centers Surges Past Traditional Offices
Investment in AI data centers by tech giants like Microsoft and Amazon is growing at a pace that’s set to overtake traditional office building construction. In 2022, office construction spending was five times larger than that for data centers. Today, the gap is closing quickly.
How Large Is the Data Center Construction Growth?
Data center construction is catching up fast. Less than three years ago, spending on data centers was only 20% of what was spent on office buildings. Now, annual investment in U.S. data centers is about $28 billion. This figure has grown at an approximate 35% compound annual growth rate since 2012 and already makes up 36% of all office construction spending.
This surge reflects the growing importance of AI infrastructure, which is starting to have a noticeable impact on the broader economy this year.
Major Tech Companies Driving AI Infrastructure Investment
The largest technology firms are heavily increasing their capital expenditures on AI. Estimates show that spending by major hyperscalers—including Microsoft, Alphabet, Amazon, and Meta—will reach $348 billion in 2025 and climb to $431 billion in 2026. These figures represent 11% and 18% increases, respectively, from earlier projections.
- Alphabet plans to spend $85 billion in 2025, citing faster data center construction.
- Microsoft expects to invest over $30 billion in just the first quarter of fiscal 2026.
- Amazon continues focusing most of its capital spending on AI infrastructure for AWS.
- Meta increased its 2025 capex forecast by $2 billion and anticipates similar growth in 2026.
The momentum shows no signs of slowing.
Which Real Estate Stocks Could Benefit?
Two major data center real estate investment trusts (REITs) are positioned to benefit: Digital Realty Trust Inc. and Equinix Inc.
- Digital Realty Trust Inc. reported strong leasing momentum, with prices rising 14% in its high-power (over 1 megawatt) segment. The stock has a price target implying a 22% upside.
- Equinix Inc. shared positive demand trends and aims for long-term double-digit revenue growth through 2030. Its target price suggests a 13% gain from current levels, supported by ongoing demand for cloud and AI services.
These REITs are worth watching if you're involved in real estate and construction related to tech infrastructure.
For those interested in further understanding AI’s impact on real estate and infrastructure, exploring specialized AI training courses can offer valuable insights.
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