“Guess That Spending” How Much Did the U.S. Drop on Data Centers Last Decade?
Take A Further Look at 10 Years U.S Data Center Construction Spending
While reviewing the new data center spending data today, I decided to dig a little deeper. I wanted to see how it aligns with major cloud events and the revenue growth of hyperscalers. So here we go — can you guess the total spending over the last 10 years?
A Decade of Growth: $1.1 Trillion in Spending
From January 2014 to June 2024, total spending on private data centers in the U.S. has soared to $1.1 trillion. This represents a compound annual growth rate (CAGR) of 31% over the past ten years. The growth has been anything but linear, with a significant acceleration observed since 2022.
Breaking down the numbers, the CAGR for the period from January 2014 to December 2021 stands at approximately 30.77%. However, in the period from January 2022 to June 2024, the growth rate surged to 48.31%. This uptick reflects the increasing demand for data center capacity as businesses continue to digitize and adopt cloud-based solutions at an unprecedented pace.
The Cloud Powerhouses: Revenue Growth from 2014 to 2023
This surge in data center construction is closely tied to the meteoric rise of the three major cloud providers: AWS, Microsoft Azure, and Google Cloud. These companies have seen their revenues skyrocket over the same period, underlining the critical role they play in the broader tech ecosystem.
• In 2014:
• AWS generated $4.7 billion in revenue.
• Azure was just starting to make its mark with $156 million.
• Google Cloud, still in its infancy, posted $66 million.
• By 2023:
• AWS revenue had ballooned to $90.8 billion.
• Azure had grown exponentially to $68.1 billion.
• Google Cloud reached $33.1 billion.
The compound annual growth rates over this period tell the story of this explosive growth:
• AWS: 38.96%
• Azure: 96.49%
• Google Cloud: 99.54%
Segmented Growth in Data Center Spending
The data center spending over this period can be divided into distinct phases, each with its own growth characteristics:
• 2014-2016: This initial phase saw a CAGR of 65.13%, reflecting the early rapid build-out of data center infrastructure.
• 2017-2019: Growth continued but at a slightly slower pace, with a CAGR of 40.85%.
• 2020-2022: The growth rate flattened somewhat, with a CAGR of 21.57%, possibly due to market saturation or the effects of the COVID-19 pandemic.
• 2022-2023: A resurgence in growth occurred, with the CAGR jumping to 57.91% as the demand for advanced computing capabilities and digital services accelerated.
I’m curious about why some vertically-focused public or private companies—whether in data center construction, cooling, management services, or software—thrived or struggled amid this massive growth. It seems like a compelling topic for the next deep dive. There’s so much more to explore: What made certain players stand out? Did they capitalize on the trends, or did they miss the mark? If you have thoughts on this, I’d love to hear them.