Hyperscale Cloud Giants' Data Center Mega Deals Keep Sprouting Zeroes

April 2, 2024
It'd be odd to frame a billion dollars as just a drop in the bucket. Maybe in today's hyperscale climate, it's more like a "hang ten" worthy breaker coursing alongside the larger tsunami wave of AI investment.

Data Center Frontier's founder and Editor at Large, Rich Miller, made the point as early as 2021, highlighting how billion dollar deals were transforming the data center industry. 

That theme has resonated so much over the past three years that now apparently only the appending of significant additional zeros to emergent billion dollar deals from the hyperscale cloud giants is able to contain its reverberation.

Implications of Google's $1 Billion Kansas City Data Center Plan

Even in this disruptive age of rapidly accelerating AI and ultra cloud hyperscale demands, it'd be odd to frame a billion dollars as just a drop in the bucket. Maybe in today's data center climate it's more like a "hang ten"-worthy breaker running alongside the larger tsunami wave of AI investment.

That's certainly been the case with Google, who as CRN's Mark Haranas has noted is currently pumping billions of dollars into new data center infrastructure to underpin the growth of its AI and cloud infrastructure initiatives. 

Last month's announcement that Google would build a $1 billion data center in Kansas City, Missouri is a facet of this investment spate which seems especially notable for what it says about hyperscalers' expansions into burgeoning secondary and tertiary data center markets in the middle of the country.

Such as in Indiana, where Google is also making serious inroads, along with rival Meta, who is planning an $800 million data center in the state; and in Mississippi, where AWS has taken hold with a massive data center investment.

As presently recorded by Missouri Business Alert, on March 20 corporate and government officials including Monique Picou, global vice president of cloud supply chain and operations for Google, and Tim Cowden, president and CEO of the Kansas City Area Development Council, gathered to announce the cloud giant's ambitious plan to build a billion-dollar data center in the region. 

The new Google data center in Kansas City is reportedly set to be located in a 2,500-acre established business park, the Hunt Midwest Business Center, on NE Parvin Road.

The park contains more than 68 companies across a wide variety of industries. The report said the project will be supported by "new-to-the-grid carbon-free energy capacity" for a facility that could open as soon as next year.

“We have reached an important inflection point for tech innovation like AI, and data centers are the backbone of this progress,” said Google's Picou. “Our announcement today is a testament to the resources, talent and welcoming spirit of the Kansas City community. Together, Kansas City and Google will help power America’s digital future, and we are excited to contribute to the bright future of the region.”

As further noted by Missouri Business Alert, Google's announcement came "nearly two years to the date of [...] rival Meta’s unveiling of plans to build an $800 million data center in the region. That site — east of Kansas City International Airport — is expected to be operational this year."

“Google’s major investment in KC will have multiple positive impacts long term,” said Tim Cowden, president and CEO of the Kansas City Area Development Council.

Cowden continued, "Not only will the tech company invest hundreds of millions of dollars benefitting our region’s economy in myriad ways, but Google’s global brand will now be directly linked to KC’s rising global brand. Google joins other international global tech and consumer brands that have recently selected KC for major investments.”

Google said it also plans to bring its Skilled Trades and Readiness (STAR) program to the Kansas City area. As part of it corporate commitment to community development, the company is collaborating with the Missouri Works Initiative and the Urban League to help increase the entry-level skilled trades pipeline into underrepresented communities. 

The STAR pre-employment programs are paid training positions, geared to help participants move directly into employment on local construction projects via associated networking opportunities.

More Google Data Center Expansion

A billion dollar data center in Kansas City is just one part of Google's hyperscale master plan. As also noted by CRN, in terms future global investments, Google has already unveiled data center expansion or building plans in Mexico, Malaysia, Thailand, New Zealand, Greece, Norway, Austria and Sweden.

Another new Google data center project of particular interest on North American shores is Delaware-based Google-affiliate Sharpless Enterprises' recent approval of plans to contruct an 181-acre data center campus in Bristow, Virginia in the state's Prince William County.

InsideNova reporting said that site, located along the north side of Wellington Road and west of Piney Branch Lane, is comprised of land previously owned until 2005 by Atlantic Research Corp, a DoD-contracted missile developer. Already zoned for industrial use in Prince William County, the site's use recently gained requisite approval from the Army Corps of Engineers for development in a wetlands area. 

DatacenterDynamics reported that Google shell firm Sharpless is looking to build a campus "with four data center buildings, an electric substation, several auxiliary equipment structures, and a small administrative building." DCD noted that the land headed into development by Google is located south of CoreSite’s Reston campus and the proposed, controversial PW Digital Gateway data center project from QTS and Compass.

“Our infrastructure is key to realizing our big AI ambitions. It’s a major differentiator for us,” commented Google CEO Sundar Pichai during the company’s Fourth Quarter 2023 earnings call this January. “We continue to invest responsibly in our data centers and compute to support this new wave of growth in AI-powered services for us and for our customers. Through this, we are being disciplined in how we run the company.”

CRN further noted that while the cost for the Bristow data center campus is unknown, Google rival Microsoft recently acquired a similar property in nearby Gainesville, Virginia, for north of $465 million with plans to build a data center campus, as originally reported by InsideNova.

Further, BizJournal reported that Microsoft bought the vacant plots of land in Gainesville from local landowner Chuck Kuhn.

Oracle's $10 Billion Data Center Infrastructure Investment

In its earnings call for the fiscal Third Quarter of 2024, Oracle CEO Safra Catz revealed that the company is looking at about $10 billion in capex investment through 2025 for purposes of new data center construction and expansion of existing data centers.

Oracle's Chairman and CTO Larry Ellisson noted that his company is "building the largest data centers in the world that we know of." Ellison added, "We're building an AI data center in the United States where you could park eight Boeing 747 nose-to-tail in that one data center."

"We're bringing on enormous amounts of capacity over the next 24 months - the demand the demand is so high, we need to do that to just satisfy our existing set of customers," continued Ellison.

He added, "To give you an idea...we're building 20 data centers for Microsoft and Azure; they just ordered three more data centers this quarter, and there are other multi-cloud agreements that are being signed."

Acceleration Economy's Bob Evans pointed out how Oracle CEO Catz revealed that the company has signed 40 distinct AI cloud-services deals that total $1 billion, for an average deal size of $25 million. 

Evans' report further noted how some of Oracle’s largest cloud customers “want their own Oracle region — they don’t want to share a public cloud,” Ellison stated. “They want a cloud region - actually, multiple cloud regions - dedicated to that bank or that technology company or that telephone company.”

Report: Microsoft, OpenAI Working Up to $100 Billion Data Center Supercomputer Project

As noted by DCF's "Eight Themes That Will Shape the Data Center Industry in 2024" forecast as penned by Rich Miller, Oracle is slightly newer to the hyperscale game than its rival cloud platforms, who of course have been working far in advance to lock down data center capacity to the tune of billions, and tens of billions of dollars. 

And now, judging by a March 29 Reuters article citing a report in The Information, no cloud giant may be working as hard as Microsoft to break that proverbial bank. Accordng to the reports, Microsoft, in conjunction with its partner OpenAI, is now said to be working on plans for a data center project that could cost as much as $100 billion. 

The Information report said the project proposes including a U.S.-based AI supercomputer called "Stargate," with a projected launch date of 2028. The proposed supercomputer would be the penultimate in a series the companies plan to build over the next six years, the report added.

The Information report attributed the project's tentative cost of $100 billion to an unidentified source who had viewed some of Microsoft's initial cost estimates. 

The report said Microsoft would likely finance the project, which is expected to be 100 times more costly than some of the largest existing data centers, citing people involved in private conversations about the proposal.



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About the Author

Matt Vincent

A B2B technology journalist and editor with more than two decades of experience, Matt Vincent is Editor in Chief of Data Center Frontier.

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