Data Centre Winners and Losers - Navigating the Next 12 Months as We Build Towards a Trillion Dollar Capex Market

Data centre Capex spending is projected to reach $600bn in 2025, up from $450bn last year. Dell’Oro Group forecasts point to $150bn annual growth becoming the norm and DC infrastructure capex reaching a trillion dollar spend by 2029.

Such projections point to a positive environment. Yet, for investors, the risks and rewards are getting bigger as a new set of data centre investment players deal with an increasingly complex market. 

NVIDIA, with a market cap reaching north of $4 trillion shines a light on the importance of the data centre ecosystem as an investment value creator.

Other IT infrastructure companies benefiting from the AI surge include Dell and Super Micro who, over the last year, saw share price rises of 70+% and 80+% respectively thanks to the wave of server demand. 

In the data centre sector the world’s two largest REITs, Equinix (1.2% up in the last year) and Digital Realty (a rise of 11%), remain top line positive in the public markets. Each delivers dividend growth. At time of writing both are trading below their 12 month highs.  

To take one investment giant as an example asset manager Blackstone has an $85bn data centre portfolio and says it has a pipeline valued at $125bn. It reports it expects an estimated $328bn of hyperscale data centre capex for 2025. For example, MS is reported as saying it will spend $80bn this year. Not to be outdone, google raised its capex for the year to $85bn.

In the context of the last two-three years of very public and very large data centre capex spending announcements for AI infrastructure by tech titan cloud Hyperscalers, emerging Neocloud players and established software giants such as Oracle, the question is whether such explosive expansion will continue. 
Or could we be entering a more nuanced development and investment cycle.

Mike Forman is Blackstone’s Senior Managing Director in its Real Estate group. Mr. Forman has been involved in investments including QTS Data Centres and Digital Realty,

In an article titled Cutting Through the Noise He writes: “Capital markets volatility may lead to periods of slower growth, and we have seen this happen before. Our current leasing pipeline is as large as it’s ever been, but we continue to be disciplined in our approach and structure our investments to minimize downside in the event demand slows. For example, we typically only build or lend to data centres after securing pre-leases with investment-grade counterparties on long-duration contracts. This means we are protected against short-term shifts in demand and can play the long game.”

With capital intensity requirements for large developments resulting in little or no speculative build projects happening, the winners and losers could be those with a pipeline of existing projects. 

With such high demand, rapid expansion and tight timelines businesses tasked with delivery and project execution could experience exposure to different forms of short term risk. 

Mark Chester, Partner and co-head of data centres at global law firm Eversheds, says: “In the European data centre market it is household name developer operators who find themselves late on delivering projects who could face large late service delivery credit claims. There can be many reasons why hyperscale projects can overrun. In many cases delays are due to circumstances that are genuinely beyond the control of developer operators. For example, the single biggest cause of late deliveries are delays in the provision of utility power.”

In multiple jurisdictions there are examples where the developer/operator contracted with the local utility for power capacity with a promise of energization delivery dates where the utility has then missed these dates, he says. 
If developers face being hit with late delivery penalties as a result of utility delays it appears to be a risk for which they are willing to take responsibility in response to tightly defined liabilities for force-majeure type events. 

Grid Alternatives 

With data centres expected to take a rising percentage of available power capacity across countries including the US and large European economies with established data centre sectors energy access remains the single biggest concern. With power connection timelines lengthening to between five and ten years – depending on jurisdiction the potential for power bottlenecks on congested and constrained grids could lead to market cooling. 

Even where power transmission companies have responded with commitments to add additional grid capacity this still leaves questions about availability of and access to sustainable low carbon power generation.

The alternatives to traditional large turbine spinning machine power generation at the scale needed for large data centre campuses (300MW-500MW) are gaining traction. 

The last 12 months have seen Hyperscalers including Google and Amazon make early stage commitments to the SMR sector. Google is partnering with molten salt SMR development outfit Kairos Power in the US for power provision in 2030. Amazon committed $500m to SMR development, including a partnership with Dominion Energy in Virginia. Its SMR plan is expected to deliver 300MW by the end of the decade.  

While SMRs have attracted much press attention development, planning, and license to operate permission timelines mean no-one in the data centre space expects to be plugged into an SMR within the next five years. 

The power gap could also be filled using on site, gas turbine and renewable grid integrated or grid independent Microgrids which are emerging as a viable power alternative option.

Country by country winners and losers 

Picking winners and losers on a country by country basis has become more complicated. 

Power access remains the single biggest concern with data centres expected to take a rising percentage of available power capacity across countries including the US and large European economies, with established data centre sectors. The potential for power bottlenecks on congested and constrained grids could lead to markets cooling. 

Power transmission companies have responded with commitments to add additional grid capacity which still leaves questions about availability of and access to sustainable low carbon power generation. Yet power connection timelines are lengthening. 

From a power access perspective in the established FLAP markets the flight to safety – in a purely physical sense – has seen the emergence secondary and tertiary markets across Europe.  

With established European markets facing grid constraints and site shortages, this has pushed growth into secondary cities like Milan, Berlin and Warsaw. 
Ireland is and will continue to be a country loser for data centre growth. Public opposition and a strained grid has pushed the Hyperscalers to other European markets and with no policy changes in site the market has peaked. 

Switzerland and Austria are rarely mentioned as prospective buoyant data centre markets due to lack of incentives, planning constraints and no desire to accommodate GW size campuses. 

While central Europe has been spoken about as having potential,  to date locations further East in the countries such as the Czech Republic, Romania and Bulgaria continue to suffer through outdated grid infrastructure and a lack of policy support which have seen little or no hyperscale activity and fledging activity by local players. 

For businesses looking further afield South Africa remains a volatile market with power companies struggling to commit to grid infrastructure. 

But opportunities exist in South Africa as in other sub Saharan markets where traditional generation power transmission constraints could see developers jump straight to stand alone microgrids for secure power – much as evolving markets eschewed fixed line connectivity and leapfrogged straight to be mobile telecoms.

New Edge

As some countries move to catch up on attracting investment through grid infrastructure upgrades and incentives European metro markets are expected to experience growth due to proximity AI and inferencing workload demand and market overall is expected to advance. 

The post model building and training bring next stage of Proximity AI, inference, reasoning and agentic AI input play could shift attention away from vast campuses to a proliferation of Edge data centres. 

Evershed’s Chester again: “Some market money had a view of the direction of the data centre sector brought about the flurry of AI learning opportunities (LLMs and large scale campuses) as requiring big sites with huge amounts of power. This did result in some places with large amounts of capacity being secured for those projects. As well as working on such deals at the same time we have been kept busy with opportunistic players looking to AI Edge and possible refurbs. This too is spurring huge amounts of activity and takes particular knowledge to make happen.” 

A new AI Edge will evolve but 5G, IoT and Smart Cities promised investors an Edge data centre revolution before. 

How AI Edge plays out presents a major opportunity. 

Neil Cresswell, Vice Chairman, VIRTUS Data Centres, says:  ‘It’s a rapid pace industry and we’re seeing a faster shift than initially anticipated. Liquid cooling is already here and becoming the norm, with Inferencing Workloads rapidly expanding across Europe’s major cities. While training may move to remote areas with cheaper power, inference is staying close to metro hubs. To stay at the forefront, data centres must be flexible and capable of supporting hybrid cooling, varying densities, and evolving technologies. Demand is strong and Europe and growing solidly – the next 12 months with see further growth in not only the core markets, but also the rapidly expanding tier II markets.’ 

New Clouds (NeoClouds)

Other questions have arisen about whether Hyperscalers and NEO clouds will change their investment focus. Could Coreweave’s $9bn acquisition of Core Scientific be a sign of things to come? Coreweave says the acquisition gives it access to a 1.3GW gross power data centre footprint in the US – with potential expansion of an additional 1.3GW. 

Might it point the way to a strategy shift where the Hyperscalers move from lease deals to ownership by snapping up commercial data centre outfits to secure more capacity by buying buildings, expertise and power to operate more of their own infrastructure.  

Microsoft already has reportedly pulled out of leases in the US citing issues of overcapacity in certain regions such as Virginia – despite very low vacancy rate of less than 1% being reported in the state. What might this mean for the private commercial data centre investment sphere? 

Technology disruption 

Any long term investment – such as power and data centre infrastructure - is always at risk of technology disruption. This is especially true in the digital realm.

The Generative AI LLM disruption is a boon for the data centre space creating opportunities for investors from GPUs to powered land and shells to GW+ size campuses.  But as AI evolves investors are tasked with forecasting who the outright infrastructure winners will be.

There is the prospect of emerging technology disruptions such as that from Quantum Computing, photonic networking, and even DNA based data storage. 

These are technologies that could completely reshape how and where mid-sized and large data centres are designed, built and fitted out with multifarious power and cooling infrastructure designs. And with major implications on how they are operated on a day to day basis. 

Cyber Threats

Another aspect of technology disruption are new threat environments. 

Potential data centre losers are those targeted by state sanctioned and other bad actor cyber attacks. 

The Blackrock Global Risk Dashboard for Jul25 said: “AI and its associated hardware, data and tech clusters will increasingly be treated as national security assets. State-backed hacking remains a significant risk that is increasingly centred on political espionage, infecting critical infrastructure with malware and the industrial-scale theft of intellectual property. State-backed operations surged last year, with some critical industries seeing a 300% spike in targeted attacks, according to CrowdStrike’s 2025 Global Threat report.

This is also true for energy systems (where Europe is still exposed to energy system fragility) and data centres.

The CrowdStrike report also said: ‘2024 brought the emergence of threat actors who specifically target cloud environments with unique cloud specific skill sets. This focus is expected to intensify in 2025 [and beyond].’ 

To respond to surging demand requires people to design, build and operate data centres.

It is one aspect of risk that is often overlooked but fortunately at an operator and supply chain level companies such as STACK Infrastructure EMEA and AVK are working to attract the next generation of engineering, design and operational professionals by investing in skills and through their STACK Academy and AVK Academy. 

Winners could be defined as those who tackle the people, talent and skills question head on as delivery and project execution become the true success metric. 

Next Trillion Dollar Market 

The variety of risks and opportunities outlined above describe a data centre market that is high on risk and reward. 

As indicated, a simple formula for successful fund deployment spans smart capital structure, pre-signing ten year leases with investment grade customers for large scale projects with guaranteed connections to secured sustainable power and investing in managing ongoing operational risk.

Sounds easy. Put all of those in place and the prize is huge. But even in a buoyant data centre market the shifting sands of the real world mean making informed strategy decisions requires stakeholders to take every opportunity to hear from global investment industry leaders on where this next trillion dollar market is going over the next twelve months.