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AI revolution will add fuel to data center boom, says BlackRock

AI revolution will add fuel to data center boom, says BlackRock

Investment giant BlackRock sees significant potential for massive data center growth in the coming years, largely fueled by demand for KI workload.

In the company’s presentation on its global outlook for mid-2024 this week, BlackRock highlighted the critical role that data centers will play in the coming years.

As the world undergoes a technological transformation comparable to the Industrial Revolution, the investment firm expects data centers to consolidate their position as critical infrastructure components.

As the demand for AI increases, the demand for data centers is expected to increase tremendously in the near future.

“When we look at the growth of AI data center“Over the next few years, annual growth is expected to be somewhere between 60% and 80%,” Wei Li, BlackRock Global Chief Investment Strategist, said at a press conference on Tuesday (July 9).

Data centers are the engine of the AI ​​revolution

In response to a question from Knowledge of data centers Regarding the role of data centers in BlackRock’s overall outlook, executives were overwhelmingly positive. However, they also noted that the digital infrastructure sector was not without its challenges.

Jean Boivin, head of the BlackRock Investment Institute, said many different things need to happen to enable the AI ​​revolution and the potential productivity gains it can bring.

Related:New Data Center Developments: July 2024

Boivin noted that Li’s estimate for data center growth is largely based on industry analysts’ expectations about what will happen in the coming years.

Li added that the Global Outlook for Mid-2024 report outlines how the race to scale AI capabilities is already driving large capital expenditures. “AI and the low-carbon transition could drive historically large capital expenditures – and in a much shorter time than previous technological revolutions,” the report says.

Li noted that BlackRock estimates already predicted capital expenditures for AI comparable to the largest capital expenditures in history, in major global transformations including the Industrial Revolution.

‘Construction frenzy’ of data centers

BlackRock has invested heavily in data centers in recent months to capitalize on the growing interest in AI.

“We’ve made (investments) across a range of our funds in data center development here in the United States, in Northern Virginia, and also in Germany, in Frankfurt, through some partnerships,” said David Giordano, global head of climate infrastructure at BlackRock.

Data center analysts have been closely watching the sector’s growth. “The data center construction and expansion frenzy is already in full swing, as it started some time ago to meet secular demand drivers and strong demand for cloud services,” said Alan Howard, chief analyst at Omdia. Knowledge of data centers“The pandemic was a major catalyst for increased demand for digital infrastructure, and new demand has emerged from AI that has again driven demand for data centers.”

Related:Peter de Bock from ARPA-E talks about obstacles and innovations in cooling data centers

Looking ahead to the second half of 2024, Howard said: “In terms of construction, the stage is pretty much set, but what we will also see after construction starts is more project announcements and initiatives in anticipation of continued demand growth.”

Read more about the latest news in data center construction and design

He added: “The investment community, particularly private equity infrastructure funds, has been investing heavily in data centres for a long time, but the AI ​​opportunity will revitalise the sector as there is ample capital for well-researched data centre projects.

“There are many things that could dampen the explosive growth of AI, and it is a complex web of interconnected market dynamics, but one of the key issues is a combination of AI hardware supply chainthe costs and data center infrastructure needed to run the hardware.

“These factors have the potential to drive many AI consumers to adopt AI services from hyperscalers or other T2 cloud service providers. That evolution will take a few years to unfold, and the wild card will be how AI server vendors compete with Nvidia. There are a lot of moving parts.”