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AlixPartners recently surveyed more than 400 senior executives in the data center industry to gain insight into current market trends and identify key strategies to maximize value creation.
400 industry insiders agree that while we are experiencing an AI boom, data center demand and the silicon architecture powering GPUs are about to change. We will soon see distress and M&A across the industry.
As AI capabilities scale, we expect a sharp divergence: Companies that get their strategy, integration, and execution right will achieve outsized success, while others—regardless of infrastructure investments or market hype—will fall behind.
Shifting investment priorities, evolving silicon architecture, next-gen energy strategies, and adapting to changing regulations will define the winners of the next chapter.
Key themes and predictions from the survey
Demand is expected to grow, but volatility looming
Less than 50% of respondents have visibility into data center demand over the next 12 months, suggesting volatility is potentially coming.
65% of survey respondents say GPU-powered data centers are in a growth stage.
60% agree we will see trillions of dollars spent on AI.
The data center industry is experiencing strong growth driven by AI and cloud migration.
Architecture will change
Market expectations point to a shift from AI training to inferencing workloads.
98% agree or strongly agree that inferencing will be the key driver of future demand.
72% expect inferencing to run on a newer silicon architecture.
Only one-third of respondents believe training will continue to grow. This will require new commercial models that account for diversified infrastructure, performance output, latency requirements, and regional availability
Demand could move to tier 2 markets
50% of REITs are prioritizing Tier 2 cities for future investment.
While Tier 1 hubs remain the primary focus, energy limitations, rising costs, and grid constraints could shift interest toward Tier 2 markets. This underscores the importance of operators understanding the latency requirements for the supported workloads.
Local energy solutions are more critical than ever before
85% agree that behind-the-meter energy solutions are the most viable near-term path forward, particularly for data centers exceeding 500 megawatts (MW).
Geopolitical pressures will limit options
96% of investors and lenders say geopolitical uncertainty significantly impacts investment plans. Regional public incentives and favorable policies are crucial for attracting investments.
High valuations with signals of distress
80% of respondents agree that data center asset valuations will remain high over the next two years. Confidence is strong among operators, investors, and lenders, yet at the same time, two-thirds of REIT and construction players anticipate potential distress, particularly as enterprise data centers decline or are divested.
Incoming M&A
70% of respondents expect M&A activity to become more attractive within the next year.
Navigating uncertainty
The data center industry stands on the brink of a dramatic transformation — a battleground where speed now eclipses efficiency and long-held certainties are being upended by relentless technological disruption and tightening regulatory pressures. Tech giants are pouring unprecedented capital into data center infrastructure, racing to dominate the rapidly evolving AI landscape. This surge has triggered a frenzy in demand as they strive to outpace one another in the AI arms race.
We believe only those bold enough to prioritize adaptability, innovative modular designs, energy sources like nuclear, and digital automation — coupled with a deep understanding of power and latency — will survive.
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