Leader Learnings: Will the USA's Trajectory be Mirrored Globally?

The American Digital Backbone

America's dominance in the data center landscape is hard to overstate—it houses nearly half (46%) of the world's facilities.

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This isn't surprising given Silicon Valley's longstanding influence, yet what's remarkable is how rapidly the sector is evolving.

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Big Tech capital expenditures are projected to jump from $230 billion last year to over $320 billion this year, with much of this flowing into infrastructure that will redefine how tomorrow's digital services operate.

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This will set a new blueprint that other regions will adopt, willingly or by necessity.

AI: The Game-Changer Behind the Curtain

Let's be clear about what's driving this investment surge: artificial intelligence, particularly generative AI, demands computing resources at unprecedented levels.

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A single ChatGPT query consumes roughly 10x the energy of a standard Google search. Scale that up to millions of daily interactions, and the resource implications become staggering.

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American tech firms are responding pragmatically.

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They've already mastered building massive data centers. Now they're tackling the challenge of making them sustainable at scale, for both environmental and financial reasons.

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With cooling and power typically eating up more than 50% of total OPEX, efficiency isn't just green marketing—it's essential to survival.

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The Race for Power

A commonly discussed aspect of this boom is the "power rush" unfolding across the country. Big Tech is reshaping America's energy landscape through distributed energy resources, long-term power purchase agreements (PPAs), and investments in frontier energy technologies.

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Other DC operators are quickly rushing to markets with untapped power resources and large tracts of cheap land.

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Nuclear power, long sidelined in clean energy conversations, is making a comeback through small modular reactors (SMRs).

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While still highly speculative, these are attracting hundred-million or even billion-dollar investments and multi-year contracts from tech giants who need reliable, carbon-free power sources.

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The power struggles, however, are sometimes overhyped. Is it important to recognize that the US has enough land and power to meet the immediate demand for data centers and to continue doing so in the short-to-medium term?

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Renewable power sourcing, however, is a challenge. Sustainability is a challenge. It will be interesting to see where the incoming governments' fossil-fuel-friendly policies lead in terms of the energy transition.

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Will GAFAM continue spending billions on SMRs?

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Will they continue to sign multimillion-dollar PPAs with renewable energy providers?

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Probably.

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While political winds may favor fossil fuels, market forces are pushing tech companies toward sustainable alternatives. Long-term energy costs are a competitive advantage.

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Key Technology Investments

America's technological edge extends beyond the data centers themselves. Significant capital is flowing into adjacent technologies that enhance data center performance:

• Photonics: Advanced optical technologies to increase data transmission speeds

• Superconductors: Materials that can dramatically reduce power losses

• Small Modular Reactors (SMRs): Next-generation nuclear power for reliable, carbon-free energy

• Long-Duration Energy Storage (LDES): Systems that can store renewable energy for extended periods

• Virtual Power Plants (VPPs): Networked distributed energy resources that function as a unified system

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We will likely see continued investment in this space.

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Technologies focused on power + network transmission amplification have been the core focus of investment from Big Tech, VCs, and other corporations seeking to gain exposure to data centers.

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Where America Stumbles: Connectivity Challenges

Despite America's advantages, it faces a curious infrastructure gap: fiber connectivity lags behind more densely populated regions in Europe and parts of Asia.

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The vastness that makes land acquisition easier also complicates network deployment.

This limitation has practical consequences.

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Massive computing centers can be built almost anywhere with sufficient power and water. Yet their usefulness diminishes without robust connections to data exchange points.

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As AI applications increasingly demand real-time processing, this connectivity challenge may shape where data centers cluster.

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Colocation may be the way forward

While hyperscale facilities grab headlines, a quieter revolution is happening in the colocation space.

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Faced with escalating cloud costs, many enterprises are rediscovering the benefits of hybrid infrastructure models that blend on-premises, colocation, and cloud services.

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This shift is about flexibility. Companies are learning that different workloads have different requirements.

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The one-size-fits-all public cloud approach sometimes falls short, especially for data-intensive operations.

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Cloud providers recognize this reality and increasingly partner with colocation facilities to extend their reach into new markets without building everything themselves.

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This bifurcated approach acknowledges that even in a cloud-first world, physical infrastructure proximity matters.

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They are, however, also leveraging their experience in dealing with local governments and telcos to build their facilities.

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Exporting the American Model

APAC and Europe will by no means replace the US as the hub for digital infrastructure.

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However, we see these markets growing simultaneously as Big Tech recognizes the importance of edge computing by placing computing power closer to the end users.

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Large portions of developing markets are yet to come online, and major US techs are keen to capitalize on this forecasted growth.

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This is exemplified by countries like Indonesia, Thailand, and Vietnam.

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Indonesia's digital economy and growing developer community have attracted Microsoft, which recently committed $1.7 billion despite lingering concerns about the country's digital ecosystem.

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Similarly, Thailand is seeing its first major investments in data center infrastructure, with Microsoft reportedly investing around $1 billion to help decentralize digital resources beyond Bangkok.

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Australia is strategically positioning itself to capitalize on Asia's online growth, leveraging its established data center presence and strong government ties to scientific research.

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Meanwhile, Vietnam is emerging as a beneficiary of Western companies seeking alternatives to China. Recent regulatory reforms have opened Vietnam's data center market to foreign investment as local players struggle to keep pace with the country's rapidly growing digital economy.

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