The surge in artificial intelligence (AI) adoption is propelling a dramatic rise in demand for hyperscale data centers, placing infrastructure providers at the heart of the next technological boom. Nvidia’s (NVDA) strategic partnerships with tech behemoths like Amazon’s AWS (AMZN), Alphabet’s Google Cloud (GOOGL) (GOOG), Microsoft’s Azure (MSFT), and Tesla (TSLA) underscore a pivotal trend in AI: as cutting-edge AI systems proliferate, the demand for robust data infrastructure is skyrocketing.
These collaborations have catalyzed the deployment of Nvidia’s advanced AI chips across global cloud platforms, particularly through high-profile projects like AWS’s Ceiba and the integration of Nvidia’s H100 GPUs. However, this rapid expansion in AI innovation comes with a crucial dependency—scalable, powerful data centers.
Infrastructure Fuels AI Growth
As Nvidia’s AI systems become increasingly complex, the computational load on data centers grows in tandem. Tesla’s bold plan to deploy 85,000 Nvidia H100 GPUs by the close of 2024 illustrates the immense scale of AI infrastructure requirements. These operations are sustained by hyperscale data centers, vast facilities meticulously designed to support the extraordinary computational needs of AI and other data-intensive technologies.
Unlike traditional data centers, hyperscale facilities are built for flexibility and scalability, often accommodating tens of thousands of servers and enabling rapid expansion to meet unpredictable surges in demand. This adaptability is critical as AI workloads evolve, often growing exponentially. Moreover, these centers are strategically located based on factors like energy efficiency, network latency, and natural-disaster risks, further optimizing their operations for large-scale AI applications.
Hyperscale Data Centers: Fueling AI’s Exponential Expansion
AI’s breakneck evolution has created a symbiotic relationship with data-center infrastructure, driving exponential growth in the hyperscale market. Forecasts indicate the hyperscale data-center market will skyrocket to $262.09 billion by 2032, from $44.89 billion in 2024—a compound annual growth rate (CAGR) of 24.7%. This explosive growth underscores the immense opportunities for companies involved in the infrastructure supporting AI advancements.
For investors, this opens a less conspicuous but highly lucrative avenue. While Nvidia continues to dominate headlines with its innovative AI chips, infrastructure providers—those that build and operate the hyperscale data centers enabling Nvidia’s technology—present equally compelling investment prospects. These companies are integral to the AI revolution, functioning as the backbone of data storage and processing for AI development and deployment.
Key Infrastructure Players: AI’s Unseen Powerhouses
Though they may not attract the same media attention as Nvidia, companies involved in AI infrastructure are essential to sustaining the AI boom. Here are five key players making significant strides in this sector:
- Equinix (EQIX) – A global leader in digital infrastructure, Equinix operates 260 data centers in 71 major metropolitan areas across the Americas, Asia-Pacific, and EMEA (Europe, Middle East, and Africa). It plays a crucial role in housing and powering AI systems globally.
- Digital Realty Trust (DLR) – With more than 300 data centers across six continents, Digital Realty provides scalable network architectures necessary for AI applications. Its extensive reach makes it a critical player in the AI infrastructure landscape.
- Hewlett Packard Enterprise (HPE) – HPE offers comprehensive data-center solutions, including servers, storage, and networking systems tailored to the needs of AI-driven enterprises.
- CoreSite Realty Corp. (AMT) – As a unit of American Tower REIT, CoreSite operates high-performance data centers across key North American markets, supporting enterprises and cloud providers with AI and other data-intensive workloads.
- NTT Ltd. (NTTYY) – NTT operates over 160 data centers in 20 countries, providing state-of-the-art digital infrastructure. Its global footprint and cutting-edge facilities make it a vital enabler of AI technology.
These companies are not just supporting AI growth—they’re actively shaping the infrastructure upon which AI innovation depends. Their hyperscale data centers are positioned to handle the rising computational and storage demands, ensuring that AI development continues to accelerate.
Investment Implications: Who Really Wins in the AI Gold Rush?
The current AI surge offers a nuanced opportunity for investors. While companies like Nvidia continue to lead in AI innovation, the businesses facilitating the deployment and scaling of AI technology may offer superior long-term growth potential. Investing in these “picks and shovels” of the AI revolution could yield substantial returns as their infrastructure becomes increasingly indispensable to AI’s progress.
These infrastructure players are not just participants in the AI race—they’re the architects of the technological landscape on which AI thrives. As AI systems become more powerful and ubiquitous, the demand for robust, scalable infrastructure will deepen. Investors looking to capitalize on the AI boom should not overlook the foundational companies building and maintaining the systems that power this revolution.
In the high-stakes world of AI advancement, the question for investors is this: Will your portfolio focus on the companies grabbing headlines, or will you invest in the powerhouses building the indispensable infrastructure that makes AI possible?
Conclusion
As AI reshapes industries and Nvidia’s dominance in the AI space continues to grow, data-center providers are positioned to emerge as the backbone of this technological revolution. The hyperscale data-center market is on an explosive growth trajectory, driven by AI’s insatiable demand for computational power. While AI chipmakers like Nvidia dominate the spotlight, investors seeking to capture the full value of the AI boom should look to the companies behind the scenes—the infrastructure providers who are quietly enabling AI’s meteoric rise.