AI takeoff turns data centers into America's new building boom

US companies are plowing money into building data centers as they race to get ahead in artificial intelligence.

Private construction spending on data centers has surged close to $30 billion a year, according to the most recent numbers from the Census Bureau, more than double what it was in late 2022 when OpenAI's ChatGPT was released to the public.

Corporate America now allocates a bigger building budget for data centers than it does for all kinds of categories that were attracting more cash as recently as last year, from hotels to retail and leisure facilities.

The US is leading a surge of investment in data centers, with global spending on track to reach $250 billion a year according to money manager KKR & Co. The industry is benefiting from the development of AI and its need for computational power on an ever-larger scale.

It also has a voracious appetite for electricity — raising concerns that big tech companies may demand a growing share of power-generating capacity, potentially raising costs for households and other businesses.

Last week, the top US energy regulator rejected a special deal that would have allowed an Amazon.com Inc. data center to use more power from an adjacent nuclear power plant.

The Census Bureau only started publishing separate numbers for data centers in July this year. Until then, it was subsumed in the office category. At the start of last year, data centers accounted for less than one-sixth of overall office construction, but now the share has climbed above one-third.