The artificial intelligence-fueled data center boom is in full effect, with cloud giants like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) riding a new revenue wave and spending billions of dollars on new facilities to support and maintain that ride for as long as possible.

MTN Consulting noted that webscale capex “has been on a tear” through the first half of 2024, with a a robust 25% year-over-year increase during the first quarter, and a more resounding 51% explosion in Q2. That Q2 number on an annualized basis would result in a record $226.4 billion in full-year capex.

MTN Consulting’s Matt Walker noted that investment growth has been largely driven by technology spending, “in particular purchases of servers (GPU and CPU) for data center facilities already up and running.” Amazon, Microsoft, Alphabet/Google, and Meta/Facebook accounted for 80% of that Q2 spend.

That investment is also being targeted at physical data center expansion projects, with MTN pointing to “big land purchases and long-term efforts to develop all-new data center campuses.”

This push was highlighted by a recent Synergy Research Group (SRG) report that found there are currently 510 new data center facilities in various stages of planning or construction around the world. SRG echoed MTN’s list of hyperscalers that are driving the market, but also cited a continued regional bias to a handful of locations.

Data center density and expansion SRG found that 20 “state or metro markets account for 62% of the world’s current hyperscale data center capacity.” Northern Virginia is the densest market, hosting nearly 15% of the world’s data center capacity, followed by Beijing at around 7%.

SRG linked the geographical dominance to where most of the largest hyperscalers and webscale providers house their headquarters, but also pointed to operational angles when citing expansion expectations.

“A range of factors influence the choice of location for hyperscale infrastructure, including proximity to customers, availability and cost of real estate, availability and cost of power, networking infrastructure, ease of doing business, local financial incentives, political stability, and minimizing the impact of natural hazards,” SRG Chief Analyst John Dinsdale wrote. “When you weigh up those factors it tends to mitigate against some of the world’s biggest economic hubs, like London and New York, while favoring some sparsely populated U.S. states like Oregon, Iowa, and Nebraska. That makes for a different mix of leading markets compared to retail colocation data centers, which hyperscale companies often use to house their edge-oriented infrastructure. While the general location decision criteria will remain the same over the coming years, the mix of top market will change driven mainly by high growth in emerging markets such as parts of Southeast Asia and Latin America.”

Other firms are also predicting continued data center expansion.

Dell’Oro Group recently predicted data center capex will surge to a 24% compound annual growth rate (CAGR) by 2028 due to “surging demand in AI-related data center infrastructure.” This could result in a 13-figure market over the next several years.

“AI has the potential to generate more than a trillion dollars in AI-related infrastructure spending in cloud and enterprise data centers over the next five years,” Baron Fung, senior research director at Dell’Oro Group, wrote. “AI infrastructure, which includes servers with GPU or custom accelerators, along with dedicated networking, storage, and facilities, are highly capital-intensive. While the industry continues to assess the potential return on AI-related investments, major efforts have been underway in the ecosystem in achieving long-term sustainable capex growth.”

What about jobs? Despite the recent data center capex run, MTN Consulting also noted that headcount across the webscale market was only up slightly over the past year, sitting at approximately 4.18 million employees in mid-2024. The firm explained that the year-over-year difference was “negligible” in connection to the overall employment numbers and that it expects the overall count to begin to slide due to the growing use of AI and generative AI (genAI) tied to gaining new efficiencies.

“Some of the biggest webscalers are investing heavily in AI and genAI with one clear goal being to improve their internal cost efficiencies. This inevitably will mean fewer employees,” MTN’s Matt Walker wrote. “Even within the ecommerce space, there is a rising use of robots and autonomous vehicles in the logistics chain. Webscale employment is unlikely to rise much from here, if at all.”

This notion is already playing out among some of the market’s larger webscale and hyperscale players.

Microsoft and Google earlier this year reportedly slashed hundreds of jobs at their respective cloud business units. This included Microsoft cutting up to 1,500 jobs at its telecom-focused Azure for Operators business and hundreds more from its Mission Engineering operations, and Google cutting jobs from its sales, consulting, go-to-market strategy, operations, and engineering teams.