What Lies Ahead for the World’s Largest Data Center Operators in 2024?

The rapid expansion of hyperscale cloud data centers, essential to the digital economy, continues with new facilities announced alongside ongoing advancements in sustainability and technology. 

As we progress through 2024, the top hyperscale data center operators globally are expanding their presence in response to growing demands. Leading companies like Meta, Microsoft, Google, Amazon, Oracle, and Akamai have been notably active in early 2024, unveiling ambitious plans for the future. 

Projections from Synergy Research Group suggest that within the next six years, the average capacity of hyperscale data centers will more than double compared to current operational facilities. Initial 2024 announcements are already indicating a significant growth trajectory. 

The data center industry is on the cusp of a transformative era, driven by rapid advancements in artificial intelligence (AI), power generation, and automation. As the world's largest data center operators navigate this evolving landscape, they must strategically adapt to meet the surging demand for computing power and digital infrastructure. From retrofitting existing facilities to accommodate AI workloads to modernizing power grids and embracing automation, these industry leaders are poised to shape the future of the data center landscape in 2024 and beyond. This blog will explore the key trends and challenges that will define the path forward for the world's top data center companies as they strive to stay ahead of the curve. 

Current Situation: Ongoing Development of Large-Scale Data Center Initiatives in 2024 

Amazon Web Services (AWS) has revealed intentions to allocate $10 billion towards constructing two data center complexes in Mississippi.  

Simultaneously, existing AWS data centers are expanding, with blueprints for 12 additional Availability Zones and four more AWS regions in Germany, Malaysia, New Zealand, and Thailand. 

Meta is set to establish an $800 million data center campus in Jeffersonville, Indiana. This campus will mark the 18th data center for the Facebook parent company in the US and the 22nd globally. Meta is also revamping data centers in Kuna, Idaho, and Temple, Texas to meet the evolving demands of artificial intelligence (AI). 

Microsoft has pledged €3.2 billion ($3.4 billion) to amplify its AI infrastructure and cloud computing capacity in Germany, with a specific focus on bolstering the existing cloud region in Frankfurt and introducing new infrastructure in North Rhine-Westphalia. 

Alphabet, the parent company of Google, has disclosed substantial investments aimed at augmenting its data center infrastructure to keep pace with the escalating service demand. Notably, Alphabet has initiated the development of a new data center situated in Waltham Cross, located north of London in the UK. 

In 2024, hyperscale data center operators are growing more discerning about new data center locations as emerging factors gain significance. 

Artificial Intelligence (AI) is Transforming the Environment of Large-Scale Data Centers 

The largest hyperscale data center operators are making significant investments to expand their infrastructure.  

This rapid expansion of data centers is influenced by the increasing significance of AI. As AI-related workloads continue to grow, data center providers must consider the energy grid's ability to support such demands. This leads to the acceleration of AI-related infrastructure within hyperscale data centers. Analysts predict that hyper scalers and other service providers will account for a large portion of AI server units. 

In this evolving landscape, the integration of AI into data center operations becomes crucial. It drives the need for higher server densities, specialized hardware and software configurations, and the large-scale deployment of Graphics Processing Units (GPUs). However, the implementation of power-hungry GPUs poses challenges to the already strained power and cooling systems of many data centers. 

The industry's response to these trends emphasizes the shift towards AI integration and the strategic deployment of GPUs, reflecting the increasing demand for computational power and the importance of sustainable operations in data centers. 

Achieving Sustainable Data Centers: The Journey of Hyperscale Operators  

Balancing the need for growth with sustainability is a significant priority for hyperscale data center operators. 

Environmental sustainability is a key focus for these operators in their 2024 data center strategies. Stricter climate risk disclosure laws in the US and Europe are pushing hyperscale operators to improve efficiency and transparency in response to pressure from influential customers in regulated industries. 

The operators are expected to enhance their energy consumption telemetry and reporting, enabling customers to review and control their carbon footprint. Each major hyperscale data center operator has committed to optimizing energy consumption and implementing environmentally friendly practices. 

For example, Microsoft is dedicated to scaling cloud computing power while reducing environmental impact, aiming to be carbon-negative, water-positive, and zero waste by 2030. Oracle has set a goal to match all its worldwide cloud regions with 100% renewable energy by 2025. Google is aggressively developing data centers with a focus on sustainability, including plans for clean energy procurement and water stewardship initiatives. 

These commitments underscore the operators' dedication to sustainable operations and their efforts to minimize their environmental footprint. 

What's Driving Hyperscaler Data Center Buildouts? 

The demand for hyperscale data center operations shows no signs of slowing down. According to Dell'Oro analyst Baron Fung, there are four main drivers behind the race to build newer and more facilities globally. 

1. AI: Hyperscale data centers need to be equipped with AI-ready infrastructure, which has specific cooling and power requirements. Service providers are constructing new AI-ready data centers alongside existing facilities, intending to decommission older ones once the new ones are operational. 
2. Redundancy and resilience: Service providers continue to expand their data center footprint even in existing regions to increase redundancy and minimize downtime. They also add capacity based on utilization metrics, as data centers typically have a lifespan of around 15 years. With the emergence of cloud computing around 10-15 years ago, it is now time for a refresh. 
3. Edge services: The demand for edge-based services, supporting use cases such as IoT, smart manufacturing, autonomous driving, and smart retail, is driving the need for smaller, more distributed data centers located closer to the edge where machines and sensors are located. This may result in greenfield investments in data centers at the edge. 
4. Data sovereignty: Cloud service providers are expanding services and capacity in new regions to meet performance and data sovereignty requirements. Data center locations play a crucial role in reducing latency and meeting regulatory requirements. While North America and Europe are well-covered, there are emerging opportunities in regions like APAC and Latin America. 

Data sovereignty regulations, particularly in Europe, are becoming increasingly significant for hyperscale data center operators. Providers are paying more attention to these regulations, including the upcoming Digital Operational Resilience Act (DORA) in Europe, which is scheduled to take effect in 2025.