Goldman Sachs Research projects that the five highest-spending US hyperscale enterprises will have a combined $736 billion of capital expenditures in 2025 and 2026 (as of July 16). Demand in the global data center market is forecast to grow substantially in the next half-decade or so, according to Goldman Sachs Research. Our analysts estimate current demand to be approximately 62 gigawatts (GW), comprised of cloud workloads (58%), traditional workloads (29%), and AI workloads (13%). AI is projected to grow to 28% of the overall market by 2027, while cloud drops to 50%, and traditional workloads fall to 21%. Data centers from the pre-AI era are increasingly ill-suited for the demands of today’s AI workloads, and the era of simple retrofitting is coming to an end. That’s because modern AI workloads require multiple GPUs working in concert, according to the Goldman Sachs Global Institute. In 2022, a cutting-edge AI system integrated eight GPUs into a single server. By 2027, the leading system will likely have 576 GPUs in a filing-cabinet-size rack, requiring a whopping 600 kilowatts (kW), enough to power 500 US homes. Specialized GPUs began superseding general purpose central processing units (CPUs) earlier this decade, ramping up power demand. Goldman Sachs Research forecasts that data center power demand will increase from 1%-2% of overall global power demand in 2023 to 3%-4% by the end of the decade. In the US, the weighting of power demand from data centers in the overall will increase even more, likely more than doubling by 2030 from 4% in 2023. Goldman Sachs Research estimates that 40% of the increase in power demand from data centers will be met by renewables, and there will be a modest amount of nuclear capacity that’s targeted for AI. The bulk of the remaining 60% is expected to be driven by natural gas. This will increase global carbon emissions by 215-220 million tons through 2030, equivalent to 0.6% of global energy emissions. Asia Pacific and North America have the most power demand for data centers and square footage online today, most notably in Northern Virginia, Beijing, Shanghai, and Texas. Goldman Sachs Research finds that capacity is centered around regions with high compute and data traffic, as well as robust corporate demand. In Europe, a surge in connection requests received by energy providers indicates that technology companies are planning to build new data centers. The increasing need for electricity for the infrastructure is reversing more than a decade of falling demand for power in the region. A new generation of data centers that can support advanced AI is rapidly being built up. In the US alone, spending on the construction of this infrastructure has tripled over the last three years, according to Goldman Sachs Research. Even as new facilities come online, occupancy rates remain near record highs for third-party leased data-centers across most US markets.