Data Center 101: Understanding the Hyperscaler Arms Race

They’re big — even sprawling. They’re complex. They’re expensive. They’re controversial.

Most crucial of all: They’re essential.

’I’m taking about “data centers,” the digital heart of the Artificial Intelligence (AI) Era.

Here at Stock Picker’s Corner (SPC) — where we believe that finding the best stories lead you to the best stocks — we understand that the data center building wave is a crucial “subplot” to the AI Era.

It’s kind of an “arms race.”

Build those data centers and meet or exceed demand and the AI Era will supercharge our way of life and serve as a massive Wealth Builder.

Come up short and we’re talking about a potential shakeup in the global pecking order and, possibly, a massive missed opportunity.

There are some obvious investment plays here. But here at SPC, we’re “diggers” and search out the best of the best.

And we’ll get you started here today …

It’s the Key “Storyline” of the AI Revolution

We don’t just find the best storylines. We make them bite-sized for the everyday investors we focus on and talk with.

Let’s do that with data centers.

Think of AI as the offense on an NFL football team.

Each “model” of AI is the quarterback who knows the playbook, guides the offense and executes the plays. The “o-line” is the protective layer, like the firewalls and cybersecurity that keeps anything from “getting in.”

But to really function, that offense needs what NFL general managers and scouts refer to as “skill players” or what sportswriters refer to as “weapons.” In short, the twitchy running backs, sure-handed tight ends and speedy wide receivers who move the ball and, eventually, score.

In the tech arena, AI data centers fill those “skill player” positions.

And just as the QB needs those speedy skilled “weapons” to spin his magic, AI models need speedy data centers to unlock their potential.

In the parlance of technology, those fast data centers are known as “hyperscalers.” (A while back, we told you to remember that term — now you see why.)

Data centers have been around since computers were invented. But those early ones were functionally focused, and were limited in size and ability. “Hyperscaler” data centers are magnitudes larger, are expandable to grow as demand increases and can serve thousands of businesses and millions of users — all at the same time.

They supply the computing power, networking abilities and massive storage that, early on, companies had to provide in-house.

It’s an arrangement that benefits everyone. By offloading the cost, staffing, management and (constant) upgrading of its data center, a company can spend all its money, time and talent on its core business.

And those hyperscale operators? With the economies of scale, and creating a “data center expertise,” hyperscale operators like the Azure arm of Microsoft Corp. $MSFT ( ▼ 0.06% ) or the Amazon Web Services unit of Amazon Inc. $AMZN ( ▲ 0.56% ) can create and operate super-profitable businesses that provide an essential service to the world.

In the NFL, teams find those skill players mostly through the draft, often via free agency and sometimes through trades.

But back in that AI arena, there’s really only one way to get a hyperscale data center.

You build it.

And the demand is powerful.

Hot Prospects

Thanks to that AI “storyline,” the need for hyperscaler capacity is just going to keep growing: To meet demand, consultant McKinsey & Co. says data-center capacity could end up growing at compound annual growth rates of 18% to 27% by the end of the decade.

To build that capacity, we’re talking about aggregate global investments of as much as $7 trillion; 40% of that in the United States alone, McKinsey says.

That’s a 1,400% increase from the $455 billion spent in 2024, says researcher Dell’Oro Group.

To give you a bit of context on that $7 trillion outlay, it’d be like you combined the economies of Japan ($4.2 trillion) and Canada ($2.23 trillion) this year — and you’d still come up a little short.

Now, while the numbers are impressive, we also know that the term “data center” or “hyperscaler” still seems like an abstraction.

So we want to help more: Since data centers are such an important chapter in the AI Era storyline, we created this report to help investors visualize the scale and scope of these operations. And, as promised, we’re “digging in” to help you see which companies have the infrastructure to lead the AI revolution.

By understanding who’s building the backbone of AI, you’ll understand which stocks have the staying power to benefit from this transformation.

Amazon.com Inc. $AMZN ( ▲ 0.56% ) 

• Operator of 397 data centers that provide customers with cloud and connectivity services.

• AI Infrastructure: Designed to support high-performance AI training and inference.

• Sustainability: Aiming for 100% renewable energy by 2030, with help from GE Vernova Inc. $GEV ( ▲ 4.54% ) .

• Smart Grid & Cooling: AI-managed power systems and energy-efficient cooling.

Amazon’s Global Footprint 

Microsoft Corp. $MSFT ( ▼ 0.06% ) 

• 276 data centers in 48 markets.

• Custom Silicon: Maia and Cobalt chips for AI training and enterprise inference.

• Copilot Ecosystem: Supporting real-time AI across Office, Teams and Azure.

• Sovereign Clouds: Tailored AI clusters for regulated industries and national Large Language Model (LLMs).

Microsoft’s Global Footprint 

Alphabet Inc. $GOOGL ( ▼ 2.08% )  

• 118 data centers in 30 markets.

• Custom Hardware: Deploys TPUs (Tensor Processing Units)—Google-designed chips optimized for machine learning and AI workloads.

• Carbon-Free Energy: Aiming for 24/7 carbon-free energy at all data centers by 2030, leveraging solar, wind and geothermal sources.

• AI-Driven Efficiency: Uses DeepMind AI to optimize cooling and energy usage, reducing power consumption by up to 40%.

Meta Platforms Inc. $META ( ▲ 0.45% ) 

• 129 data centers in 47 markets.

• Global Presence: Operates data centers across North America and Europe, with expansion into Asia-Pacific underway.

• Custom Hardware: Utilizes internally developed MTIA (Meta Training and Inference Accelerator) chips to optimize AI workloads.

• Open Compute Project: Pioneering open-source hardware standards to improve efficiency and scalability across the industry.

  

  Source: Datacentermap.com

Preparation Is Key

There’s no denying it: AI is shaping the world around us. And those changes are happening at rapid speeds.

Just think about ChatGPT. For a lot of folks, it was “just a chatbot” — a buzzy novelty — when released in November 2022.

And now …

• AI is writing code, creating videos and even composing music.

• It’s powering autonomous vehicles and transforming healthcare diagnostics.

• It’s being used at jobs.

• And it’s replacing human workers — and is likely to reposition swaths of the work force.

The thing is, there isn’t a playbook for how to live your life as AI works its way into everything we do.

It’s up to each of us to take charge of our futures — and to work towards self-reliance.

But we spend each and every day at Stock Picker’s Corner helping you do exactly that …

We help folks avoid traps and look past the “shiny” objects like meme stocks and “hot IPOs” that are designed to do nothing more than separate you from your hard-earned money.

With our industry-leading research, we also help serious Wealth Builders capture massive gains …

Like 128% on Broadcom.

And 217% on Hallador.

And 413% on RocketLabs …

And more … all in a little over a year (and even less).

Now, our approach isn’t for everybody.

We don’t trade options.

We don’t try to time the market.

And we aren’t self-serving pontificators whose work lacks actionable insights or fail to share real opportunities.

Some folks are addicted to trading, and are energized by risk. Power to them: We wish success for all … and we hope their approach delivers everything they hope for.

But it’s not for us. It’s not a winner. It doesn’t deliver sustainable success.

It actually hurts most investors.

That’s why we launched SPC Premium, a true community of people who value:

• Clarity — no jargon, no fluff, just real insights.

• Conviction — the courage to act on research-backed ideas.

• Consistency — a disciplined approach to long-term wealth building.

More people are joining that Inner Circle every day.

And we look forward to seeing you as the newest member.