AI companies continue to land huge data center deals

There are myriad uncertainties in the economy right now—AI bubble fears, cryptic job numbers, tariff impacts—but the flow of money into data centers has not been one of them, at least so far.

Tech companies have continued to pour hundreds of billions of dollars into AI infrastructure at a steady clip in the form of new high-profile chip and data center deals.

As of their most recent earnings reports, companies like Microsoft, Google, and Meta have opted to spend more than ever on building out data centers. And Nvidia chips continue to fly off the shelves, per its earnings report last week; the company said data center revenue soared over analyst expectations with 66% YoY growth.

There is, of course, a certain circularity to some of these deals—chip companies investing in their customer AI companies or exchanging cloud contracts for funding. That’s fueled fears of an AI bubble, in which case many bets are likely off.

“In recent weeks, investors have seen a pickup in large partnership announcements across AI model developers, hyperscalers, and chip companies,” JPMorgan investment specialist Stephanie Aliaga wrote in a note last month. “AI leaders are coordinating across the value chain in an attempt to ensure that supply keeps up with the speed of innovation.”

The pace of those deals hasn’t abated much since then. Here’s some of the latest news on data centers:

• Last week, OpenAI announced a partnership with Taiwanese electronics company Foxconn to design and develop AI data center racks, including cabling and networking, powering, and cooling systems manufactured in the United States. Foxconn, well known for assembling Apple products, is also working with Nvidia to build a plant in Texas that will manufacture its AI supercomputers in the US for the first time.
• Elon Musk’s xAI announced a deal on November 19 with Saudi Arabia’s AI company, Humain, to build data centers there. The largest site will consume 500 megawatts of power, the equivalent of hundreds of thousands of homes. Humain also launched a joint venture with Cisco and AMD to deploy up to 1 gigawatt of AI infrastructure by 2030, and expanded its partnership with Amazon Web Services (AWS).
• Anthropic announced earlier this month that it will spend $50 billion on custom data centers in New York and Texas in partnership with cloud platform Fluidstack. A week later, Anthropic also announced a commitment to spend $30 billion on cloud services from Microsoft, as the latter company diversifies beyond its longstanding OpenAI partnership.

All of these announcements add to an ever-growing web of partnerships set to collectively spend trillions of dollars on AI infrastructure in the coming years.

But there could be uncertainty for the industry ahead: A recent AlixPartners survey of more than 400 data center leaders found that while 86% expect data center asset valuations to remain high, 61% also anticipate potential industry distress because of energy costs, competition, and tech disruption.