The global data center market hit a new peak in 2025, with investments reaching $61 billion —a substantial increase from the previous year. This surge is driven primarily by the escalating demands of generative artificial intelligence (AI), which requires massive computational power and expanding infrastructure. Despite growing environmental and community concerns, the market shows little sign of slowing down, with projections indicating continued growth into 2026.
The AI Fueling the Expansion
Generative AI, the technology behind popular tools like ChatGPT and image generators, is the main force behind this boom. Companies are racing to secure data center capacity to support the training and operation of these models, which consume enormous amounts of energy and processing resources. S&P Global analysts predict sustained demand for AI applications, suggesting skepticism toward major AI players won’t significantly alter market trends.
However, the financing structure underpinning this growth is fragile. A majority of the recent investment comes from private equity, which relies on debt to fund these energy-intensive operations. This raises concerns about long-term sustainability, as such models are often precarious.
Power Consumption and Environmental Impact
Data centers are already straining power grids, and the problem will worsen. S&P Global estimates data centers will increase their power grid use by 22% by the end of 2025, with projections of tripling by 2030. This exponential growth has triggered resistance from environmental groups, who point to the severe ecological consequences of unchecked expansion.
Community Backlash and Regulatory Responses
Over the past year, data center projects have faced legal challenges and social opposition from community organizations in states like Virginia and Wisconsin. A coalition of 350 nonprofits has called for a halt to all data center expansion, citing environmental concerns. Advocates are actively building litigation toolkits to fight against AI infrastructure development.
Meanwhile, the Trump administration is taking the opposite approach, pledging to fast-track federal data center permits and bypass environmental regulations to meet its AI goals. This move highlights a stark conflict between rapid technological advancement and sustainable development.
The data center boom illustrates a critical tension: the insatiable demand for AI is outpacing the industry’s ability to address its environmental and financial vulnerabilities. While investment continues to pour in, the long-term stability of this model remains uncertain, especially as communities and regulators push back against unchecked expansion.
