US Data Center Construction Spend Hits Record High

Data center construction spend in the US hit a record high of $40 billion a year in June, Bank of America Global Research said in a new report issued this month.

The report cited data from the US Census Bureau and noted that the new spending level is a 28% increase from the previous year.

Amazon, Microsoft, Google, and Meta are leading the charge with sweeping expansion plans that could total more than $1 trillion in capital expenditures over the next few years. Bank of America estimates the companies will spend a combined $385 billion annually on AI infrastructure between 2025 and 2028.

The AI race has spurred a massive spending spree by Big Tech that shows no signs of slowing. On quarterly earnings calls last month, Amazon, Microsoft, Google, and Meta each told investors to expect higher capex spending than initially projected for the year.

Even Apple, which historically has spent significantly less on data centers, said last month that it had spent $9.5 billion in the first three-quarters of the year, a 50% increase from the same period in 2024.

On its first-quarter earnings call this week, Oracle stunned investors with its capex guidance of $35 billion for the fiscal year, a 65% increase from the year before. Like Apple, the software giant has historically spent less on capex relative to its peers.

Oracle’s spending push is being fueled in part by $317 billion in new AI contracts signed in the last quarter. The development, which Oracle CEO Safra Catz informed investors of on the company’s earnings call this week, spurred an unprecedented stock rally that, for a brief period on September 10, made the company’s cofounder, executive chairman, and CTO Larry Ellison the richest man in the world.

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TD Cowan analysts wrote in a research note on Wednesday that much of the $317 billion is likely from Oracle’s contract with OpenAI.

In July, OpenAI said it had signed a deal with Oracle to develop 4.5 gigawatts — a massive amount of electricity equivalent to more than two Hoover Dams — for its data center initiative, Stargate.

Stargate was first introduced by President Donald J. Trump at a White House press conference in January as a joint venture between Oracle, OpenAI, and SoftBank. Trump, who was joined at the press conference by Ellison, OpenAI CEO Sam Altman, and SoftBank CEO Masayoshi Son, said the AI infrastructure project would bring a $500 billion investment to the US.

Since that January press conference, news of the joint venture’s progress has been scant.

OpenAI has begun referring to Stargate as its own data center development initiative and has announced an expansion to Norway and the United Arab Emirates. Oracle and SoftBank were not referenced in those plans.

In July, Oracle and OpenAI also confirmed that a data center campus being developed in Abilene, Texas, would serve as Stargate I. SoftBank was not included in the announcement.