Insight
December 05, 2025
As 2025 draws to a close, tech companies have continued to pour an unprecedented amount of capital into data centers, unveiling multi-billion-dollar investments to meet the surging demand for compute capacity. The United States is expected to continue to lead the way in new infrastructure development and deployment, though Western Europe and Asia are emerging as regions poised for significant growth in investment and build out.
By 2030, analysts are projecting that there will be over 2,000 new data centers constructed worldwide. Global data center infrastructure spending is projected to approach $7 trillion over the next five years, with the bulk of that capital flowing into servers and the chips that drive modern data center performance.
Evolving Financing Models
While the financial figures continue to rise, considerations for investors across capital markets become increasingly complicated. Location, build-out timelines, and load capacity requirements are key factors shaping project risk. Given the significant capital expenditure involved, investors have had to adopt strategies that not only address the upfront spending required but also account for long-term economic and debt considerations.
To meet the scale of today’s buildouts, investors are increasingly relying on layered capital strategies that combine long-term financing with mechanisms that provide early cash flow. These include tenant prepayment structures, joint ventures with infrastructure funds and pension investors, and real estate–focused arrangements, such as sale-leaseback transactions.
At the same time, traditional project finance lenders are playing a growing role in the sector, underwriting large, syndicated loans supported by long-term leases, stable power-supply arrangements, and other risk-mitigation measures that can anchor billion-dollar developments.
Energy and Power Considerations
Despite the growing clarity around investment pathways, power reliability remains crucial with regard to the future of large-scale data center build-out efforts. With respect to data center power needs, two principal considerations emerge: ensuring reliable power generation and determining the vehicles by which that power is procured. Many hyperscalers have adopted ambitious clean energy goals and are prioritizing low-carbon alternatives like nuclear and renewables paired with energy storage systems.
Ensuring resilient transmission from those power sources to the data center can present significant challenges, particularly given the regulatory hurdles involved. Co-location has emerged as an option for data center developers, siting the facilities alongside existing power generation sources, along with Bring Your Own Generation (BYOG). Still, these arrangements also raise regulatory concerns, as the Federal Energy Regulatory Commission and state energy agencies have often scrutinized these efforts due to resource adequacy and reliability concerns.
Against this backdrop, nuclear power is quickly emerging as a central focus for data center operators seeking reliable, long-term, carbon-free power. Many hyperscalers are already forming partnerships with nuclear companies, exploring options that range from funding the development of new nuclear technology to the restart of previously retired plants.
Growing interest in new-build nuclear, both large-scale facilities and smaller, modular reactor designs, is positioning advanced nuclear generation as an increasingly viable component of future data center power strategies.
Server Connectivity
While reliable grid connectivity remains a necessity for any data center, so too is the high-capacity fiber connectivity that enables data centers to function at scale. Redundant, high-capacity fiber infrastructure is crucial to maintain a dependable connection between data centers themselves and with users and customers all over the world. Diversity in transmission connectivity can also boost overall reliability, with some data centers pairing multiple fiber lines with wireless or satellite point-to-point connections.
One of the primary ways global fiber networks are deployed is through submarine cables, which currently carry more than 98% of all international internet traffic and data. Hyperscalers have become the largest developers of these long-haul systems, leveraging direct ownership stakes and dedicated capacity arrangements to efficiently move data across their global facilities.
In contrast to the heavily regulated energy side, ownership and operation of data centers remain largely unregulated from a telecommunications perspective, at least in the United States. While licenses to operate data centers aren’t currently required by the Federal Communications Commission or most state telecom regulators, the network services provided by hyperscalers are often subject to various regulatory obligations. To secure connectivity, data center operators typically work with telecommunications carriers through established arrangements such as Indefeasible Rights of Use, capacity leases, and master services agreements that provide long-term access to fiber infrastructure.
As data center development accelerates, industry stakeholders will need to continue to navigate rising investment demands, evolving power strategies, and growing connectivity needs. Those able to balance these pressures with thoughtful planning and diversified infrastructure approaches will be best positioned to meet the next wave of global demand.
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