Global data center capacity will ‘surge again in 2025,’ says a January global outlook from Moody’s Ratings. Some of the drivers are the need to support rapidly expanding artificial intelligence, cloud computing, and data storage servicers.

Large tech companies, often called hyperscalers (referring to scaling up the amount of computing work that can be done), like Microsoft, Amazon, Google, Meta, and Oracle continue to move into new markets and types of applications, requiring an increasing number of data centers. This is necessary to provide the total amount of computing power, decentralize the technology to create redundancy and reduce risk, deliver computing and communications more efficiently and quickly to different geographic areas.

The amount of expansion is largely preleased to Microsoft, Google, Amazon, Meta, and Oracle, which has two implications. One is that it limits the speculative provision of capacity that might or might not be in demand. Another is that developers and landlords need to raise a lot of money through equity investments, loans, securitized bonds, private equity, or project finance vehicles. The five tech companies have a lot of capital available to pay so projects are financially viable.