Investment in U.S. Data Centers Grows, But More Slowly

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Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

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Summary

U.S. companies made capital investments exceeding $162 billion in data centers last year, a 30% jump over 2024, but there are signs of a slowdown.

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U.S. Data Center Buildout Appears to be Slowing

Capital investment in U.S. data centers continues to grow at an exceptional rate, though there are signs that the blistering pace of growth is slowing. In 2025, companies made capital investments totaling $162.3 billion in U.S. data centers, a 30% gain over 2024, according to data released earlier this month from the U.S. Bureau of Economic Analysis (BEA), a branch of the U.S. Department of Commerce.

Last year's sum, while sizable in real numbers, grew less rapidly than the 56% year-over-year gain from 2023 to 2024, the BEA said. The raw numbers for those years: $124.5 billion for 2024 and $79.9 billion for 2023.

"Conventional wisdom says that no industry can sustain hockey-stick growth indefinitely, though data center capital investment may test that proposition," said David Pickering, IIR's vice president of research for the Industrial Manufacturing segment. "But there's a difference between actual investment and planned investment. It's widely accepted that data center developers are being very aggressive, even optimistic, in sharing future construction plans. Time will tell." For more on that, see October 13, 2025, article - Data Centers: Is the Buildout Starting to Become a Bubble?

The BEA's full-year 2025 data, released March 13, suggests an investment slowdown in U.S. data centers.

IIR data suggest that developers continue to grow plans to build data centers, but the size, and cost, of data centers are growing even faster.

Five months ago, tech companies and data-center developers had announced plans to make capital investments totaling about $841 billion in approximately 1,544 data center projects over the January 2025-December 2027 period.

Now, Industrial Info is tracking an estimated 1,800 data center projects worth about $1.39 trillion scheduled to begin construction over the same three-year period, January 2025 through December 2027. That would be a five-month gain of about 17% in the number of projects but a 65% jump in the dollar value of planned projects. Subscribers to IIR's Global Marketing Intelligence (GMI) Industrial Manufacturing Project Database can view these proposed projects here.

IIR has determined that approximately 1,406 of these planned data center projects have a "medium" probability, meaning they have a 70% to 80% probability of beginning construction according to their schedule. Another 344 projects have a "high" probability of turning dirt according to plan while about 50 have a "low" probability of getting off the ground according to the companies' plans.

Texas and Virginia Remain Hottest Markets

Texas, Virginia, Georgia and Ohio are the states with the greatest dollar value of data center capital projects scheduled to begin construction over the January 2025-December 2027 period. Click on the chart below.

Industrial Info does not expect all announced data center projects will be built according to the developers' initial plans. Some projects will be delayed or cancelled, for various reasons. Others will be announced. Suffice it to say it is an extraordinarily dynamic industry that has extremely aggressive growth plans.

A Peak, or a Pause?

Pickering cautioned that new markets sometimes grow rapidly for a time, but that eventually levels off due to various factors, including market demand, the size of the company (bigger companies have a harder time posting significant year-over-year gains), availability of capital, availability of skilled craft labor, availability of inputs and raw materials, mergers and integration challenges, regulatory problems, local pushback and exogenous factors such as the U.S.-Israeli war in Iran, which could lead to a global economic slowdown.

There are a growing number of news stories from around the U.S. where local communities have pressured their city councils to vote against issuing permits to construct data centers. For more on that, see December 8, 2025, article - U.S. Data Center Buildout Hits Obstacles--Speed Bumps or an Iceberg?

Nearly a year ago, Amory Lovins, a longtime energy analyst who has emphasized the importance of energy efficiency and renewable energy, said the electric power industry was risking a "12-figure overbuild" with its rush to build new generation to serve data centers. Such an overbuild would amount to hundreds of billions of dollars in building unneeded electric generation capacity. Others, including some leaders at merchant electricity providers, have come to the same conclusion. For more on that, see August 20, 2025, article - Power Industry Considers Supply, Demand Options to Meet Future AI Power Demand.

Eye-popping stock valuations have already caused some investors to shy away from new investments in the stocks of tech companies and data center developers. The stocks of hyperscalers such as Microsoft, Google, Meta Platforms and Oracle have dropped over the last five months. Oracle was down about 50%. Amazon and Apple are some exceptions, with valuations flat to slightly up over that time.

"High risks can carry high rewards, but it is clear that some investors are taking money off the table," Pickering said. "Does that signal a buying opportunity, as data center advocates claim? Or has the smart money already made for the exits? Again, time will tell. Put me in the 'data center realist' camp: there are limits to how many data centers the world needs. There's no doubt that the U.S.-China data center race has added rocket fuel to a blazing market."

Key Takeaways

• A total of $162.3 billion in capital investments were made in U.S. data centers in 2025, a 30% jump over 2024 data but a slowdown compared to year-earlier gains.
• The IIR data suggests that developers continue to grow plans to build data centers, but the size, and cost, of data centers are growing even more rapidly.
• The stock prices of many tech hyperscalers have fallen since last October.
• Questions continue to linger about whether the data center buildout in the U.S. is turning into a bubble.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).