Data Center Rundown: January 2025

29 January 2025

Welcome to the first data center rundown of 2025! The new year is here, and the data center industry isn’t wasting any time making headlines. From massive investments to game-changing projects, January has already set the stage for what looks to be another huge year. So, grab your coffee (or whatever keeps you going), and let’s break down the biggest stories kicking off 2025!

What to expect:

• DeepSeek disrupts AI market

• Project Stargate: $500bn AI investment

• Meta to invest $10m

• Collaboration to power AI data centers

• And so much more!

Let’s dive into January’s data center rundown.

DeepSeek's AI Advancements Disrupt Energy and AI Markets

Chinese startup DeepSeek has unveiled a powerful AI model developed at a fraction of the cost typically associated with such technology. Built for only $5.6 million, DeepSeek's model challenges the prevailing notion that advanced AI development requires massive investments.

This revelation has led to a significant $600 billion drop in Nvidia's market value and has caused fluctuations in the shares of energy-related companies, as the model's energy efficiency raises questions about future power demands from traditional sources.

The emergence of DeepSeek signifies a potential shift in the AI industry, emphasizing cost-effective and energy-efficient development.

Chevron, Engine No. 1, and GE Vernova Collaborate to Power AI Data Centers

In a strategic move to address the escalating energy demands of AI, Chevron, Engine No. 1, and GE Vernova have announced a partnership to construct natural gas power plants co-located with data centers across the United States. Dubbed "power foundries," these facilities will utilize GE Vernova's 7HA natural gas turbines to provide up to four gigawatts of power, equivalent to the electricity consumption of approximately 3 to 3.5 million homes.

The initial projects are planned for the Southeast, Midwest, and West regions, with operations expected to commence by the end of 2027. This initiative aims to meet the growing energy needs of AI development without straining the existing power grid.

Talen Energy Challenges FERC's Rejection of Amazon Data Center Power Agreement

Talen Energy is seeking a review by the US Court of Appeals for the Fifth Circuit after the Federal Energy Regulatory Commission (FERC) denied a power agreement for an Amazon data center located at Talen's Susquehanna nuclear facility in Pennsylvania.

The co-location arrangement was intended to supply nearly one gigawatt of electricity directly from the plant to the data center. FERC's rejection was based on concerns about potential imbalances in the regional power grid's supply and demand. The court's decision could have significant implications for the future of co-located data centers and their power sourcing strategies.

Stargate Project: A $500bn Investment in AI Infrastructure

On January 21, President Donald Trump announced the launch of the Stargate Project, a $500bn private venture aimed at creating extensive AI infrastructure in the United States.

The partnership includes industry leaders such as OpenAI, Oracle, and SoftBank, focusing on building data centers and power plants to advance AI capabilities. The initial commitment is $100bn, with plans to scale up.

This initiative underscores the growing emphasis on bolstering AI infrastructure domestically to maintain a competitive edge in the global AI race.

US Startups Play Key Role in $500bn AI Data Center Initiative

In the wake of the Stargate Project announcement, US startups, known as "neoclouds," are emerging as significant contributors to the $500bn investment in AI data centers.

Companies like Crusoe, CoreWeave, Nebius Group, and Lambda are focusing on AI-specific cloud offerings utilizing Nvidia chips. These agile firms are leveraging innovative methods, such as pre-fabricated components, to expedite data center construction and deployment.

Their involvement signifies a shift in the AI data center sector, where smaller, nimble companies are increasingly influencing the landscape.

Tritax Big Box to Construct UK's Largest Data Center Near Heathrow

Tritax Big Box REIT has announced plans to build the UK's largest data center near Heathrow Airport. The company purchased 74 acres for £70m and intends to develop a 448,000 square-foot, three-story facility, with an estimated total cost of £365m.

The project has secured necessary power access through a joint venture with a renewable energy company, addressing typical industry power constraints.

Construction is expected to begin next year, with the data center becoming operational by 2027. This venture marks Tritax's significant entry into the lucrative data center market.

Meta Announces $10bn Investment in AI Data Center in Louisiana

Meta Platforms has revealed plans to invest $10bn in constructing its largest AI data center in northeast Louisiana. The facility will be powered by natural gas and is part of Meta's strategy to enhance its AI capabilities.

This significant investment underscores the company's commitment to advancing AI infrastructure and reflects the broader industry trend of developing specialized data centers to support AI workloads.

The project is expected to bolster local economies and contribute to the growing tech presence in the region.

Industry Experts Predict Key Data Center Trends for 2025

Looking ahead, industry leaders have identified several trends expected to shape the data center landscape in 2025. The growing demand for AI and machine learning capabilities is accelerating the need for advanced infrastructure, including enhanced power and cooling systems.

Sustainability remains a critical focus, with efforts to implement innovative designs and technologies to improve energy efficiency.

Additionally, the rise of edge computing is reshaping data processing, emphasizing the importance of processing data closer to end-users to minimize latency and reduce strain on central data centers.

Vertiv's Market Performance Surges Amid Data Center Expansion

Vertiv, a global provider of critical digital infrastructure, has experienced a remarkable 252% increase in its share price in 2023, outperforming all companies in the S&P 500 index.

The company's market capitalization now exceeds $44bn as of January 2025. This growth reflects Vertiv's strategic acquisitions and its pivotal role in supporting the expanding data center industry, particularly in areas such as thermal management and power solutions for high-density computing environments.

AI's Rising Power Consumption Sparks Environmental Concerns

The International Energy Agency (IEA) has released a report forecasting that power demand for data centers and AI applications could double by 2026, equating to the electricity consumption of the entire nation of Japan.

This surge in energy usage is prompting concerns about increased fossil fuel consumption and potential delays in decommissioning carbon-emitting power facilities.

The tech industry is exploring various power sourcing, such as nuclear co-location and natural gas-powered data centers, are gaining traction as companies seek to balance reliability with environmental considerations.

Meanwhile, hyperscale providers and colocation operators are investing heavily in renewable energy procurement and efficiency measures to mitigate their carbon footprints.

Additionally, regulatory pressures are mounting, with governments worldwide scrutinizing data center energy consumption and environmental impact. In Europe, new policies are being drafted to enforce stricter sustainability requirements, while in the US, states like Virginia and Texas are evaluating new frameworks to manage data center growth and its strain on local grids.

Looking Ahead

With major investments, regulatory shifts, and technological breakthroughs already defining the start of 2025, the year ahead promises to be transformative for the data center industry. AI-driven infrastructure demands will continue to shape development strategies, while energy constraints and sustainability pressures will push operators to innovate.

As always, we’ll be keeping a close eye on the latest trends, investments, and challenges shaping the future of data centers. Stay tuned for next month’s rundown, and let’s see what February has in store for the industry!

That’s it for January’s data center rundown – see you next month! Don’t forget to check out our resource hub for more industry insights.