Construction spending on AI data centers from tech giants like Microsoft Corp. (NASDAQ:MSFT) and Amazon.com Inc. (NASDAQ:AMZN). is growing so rapidly that it's set to overtake traditional office buildings, reshaping the nation’s real estate market.
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In 2022, office construction was five times larger than data center investment. Fast-forward to today, and the gap is closing fast.
How Big Is the Data Center Construction Surge?
According to Goldman Sachs’ economist Dominic Wilson, “construction on data centers is poised to surpass general office construction, having been only 20% as large as offices less than three years ago"
Data center investment in the U.S. is now running at about $28 billion annually. That number has grown at a compound annual growth rate of roughly 35% since 2012 and already accounts for 36% of all spending in the office construction category.
Wilson highlighted that the scale of AI capex is starting to show a clear macroeconomic impact this year.
Tech Giants Are All In on AI Infrastructure
The world's largest tech companies are pouring money into AI-related capital expenditures.
Goldman Sachs' latest estimates show that overall spending from major hyperscalers—such as Microsoft Corp., Alphabet Inc. (NASDAQ:GOOGL), Amazon.com Inc., and Meta Platforms Inc. (NASDAQ:META)—will rise to $348 billion in 2025 and then to $431 billion in 2026.
That's an upward revision of 11% and 18%, respectively, from previous forecasts.
- Alphabet raised its 2025 capex target to $85 billion, citing an acceleration in data center builds.
- Microsoft expects to spend over $30 billion in just the first quarter of fiscal 2026.
- Amazon reiterated that the bulk of its investment is going toward AI infrastructure to support AWS, its cloud platform.
- Meta increased the lower end of its 2025 capex by $2 billion and expects similar growth in 2026.
In short, no one is tapping the brakes.
Which Stocks Could Benefit?
Goldman Sachs remains bullish on two major data center real estate investment trusts: Digital Realty Trust Inc. (NYSE:DLR) and Equinix Inc. (NASDAQ:EQIX).
In the latest quarterly earnings report, Digital Realty Trust Inc. reported strong leasing momentum, with prices rising 14% in its high-power (greater than 1 megawatt) category. Goldman holds a $205 price target on the stock, implying a 22% upside from current levels.
Equinix Inc. also posted solid demand commentary and is aiming for long-term double-digit revenue growth through 2030. Goldman's target price for Equinix is $880, or 13% higher than the current share price, supported by continued strong cloud and AI demand.
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