Data centers took center stage in the business world last year as Big Tech poured hundreds of billions into AI. And now as President Donald Trump's second term gets underway, the industry is being thrust into the spotlight of the political world.
Courtesy of Trump-Vance Transition
SoftBank founder Masayoshi Son announcing a planned $100B investment in U.S. technology at Mar-a-Lago with Commerce Secretary nominee Howard Lutnick and President-elect Donald Trump.
With Elon Musk a key figure in his administration, and tech founders like Mark Zuckerberg and Jeff Bezos occupying prime real estate at his inauguration, it perhaps isn't surprising that data centers and AI infrastructure featured prominently on Trump’s agenda in his first days in office.
In the first 36 hours of the new administration, Trump announced a $500B data center development partnership and signed an executive order that could expedite the development of data centers powered by fossil fuels.
As Big Tech continues to make AI infrastructure a top focus, industry insiders say data center development is likely to remain firmly on the new administration’s radar.
“The general need for expanded infrastructure around data centers and around artificial intelligence ... It seems that’s very much top of mind,” Moody’s Director of Economic Research Ermengarde Jabir told Bisnow.
Trump wrapped up the first full day of his second term in office with an event announcing the creation of “Stargate” — a $500B AI data center joint venture between cloud provider Oracle, artificial intelligence firm OpenAI, Emirati sovereign wealth fund MGX and Japanese investment firm Softbank that the president called “The largest AI infrastructure project, by far, in history.”
The JV, which also includes Microsoft and Nvidia as key partners, is committing an initial $100B to building the infrastructure needed to keep up with the rise of AI, with the investment growing to as much as $500B over the next four years. The first 10 500K SF data centers are already under construction in Abilene, Texas, at a site leased from data center firm Crusoe. That site will expand to 20 data buildings, with additional data centers to be built in other locations throughout the U.S.
While the heads of Oracle, Softbank and OpenAI, who flanked Trump at the White House press conference, all suggested that the Stargate venture wouldn't have materialized were it not for Trump’s presidency, plans for the project were first reported as early as March of last year and construction began before Trump’s second term in office. Still, the high-profile unveiling and presence of some of tech’s biggest names in the Oval Office reflect the importance of data centers and digital infrastructure to the administration’s economic development vision.
With limited access to energy being the biggest impediment to building new data centers at the massive scale the industry needs to keep up with AI demand, the Trump administration has found alignment between the industry's needs and its own goals of boosting fossil fuel power generation across the U.S.
As locations with available grid power from utilities at the massive scale required by the world’s largest tech firms become scarcer, data center developers and Big Tech have increasingly looked to build campuses connected directly to new natural gas plants, at times codeveloping projects with power providers. It’s an accelerating trend that Trump says he plans to help facilitate, telling reporters Tuesday that “we’re going to make it as easy as we can for them.”
“I’m going to help a lot through emergency declarations,” Trump said following his Stargate announcement. “They have to produce a lot of electricity, and we’ll make it possible for them to get that production done very easily at their own plants if they want.”
Trump’s comments came just a day after he signed an executive order declaring a “national energy emergency.” An order that — while it doesn’t mention data centers, digital infrastructure or AI directly — Jabir and other industry experts say could have a meaningful impact on data center development.
One of a slew of executive orders signed Monday intended to boost the fossil fuel industry and slow the development of renewables, the emergency declaration aims to circumvent environmental protections and subsequently accelerate the permitting of new fossil fuel projects, from oil and gas extraction and pipelines to new generation facilities.
Among other measures, the order asks the Environmental Protection Agency to explore ways the president’s emergency powers could be leveraged to waive requirements that infrastructure projects comply with the Endangered Species and Clean Water Acts.
While executive orders can be political statements as much as policy documents, Jabir says the policies outlined in the energy emergency declaration, if implemented, would likely accelerate the buildout of gas pipelines and generation projects to power individual data center campuses or increase grid capacity in constrained markets.
In doing so, it would bring new data centers to market at a much faster clip and make development possible in new geographies. These are meaningful shifts in an industry where developers are struggling to keep pace with demand.
“From a CRE perspective … it will help provide energy much faster,” Jabir said. “It also really opens up the possibilities for site selection on a far greater expanse of land.”
But the Trump administration’s ability to actually implement this executive order is far from guaranteed, says Gudrun Thompson, senior attorney and energy program leader at the Southern Environmental Law Center.
There will almost certainly be legal challenges once federal agencies attempt to waive environmental compliance requirements for specific energy projects. The courts were not friendly to similar executive orders in Trump’s first term, and Thompson believes this trend could continue with an emergency declaration she says is predicated on shaky ground to begin with.
“Their track record of success on environmental and clean energy rollback in the first Trump administration really was not very good. They didn’t do very well in the courts,” Thompson said. “Maybe they're bolstering their actions with more legal vetting this time around, but what I've seen so far, it makes me think that they're continuing to overreach.”
Not everyone agrees, however. Even if parts of Trump’s order or attempts at implementation are shot down by the courts, it will likely not be discarded entirely, says Byron Sarhangian, a partner at Snell & Wilmer and chair of the firm's real estate practice.
He expects the executive action to move the needle on speed to market for the data center industry.
“There are going to be challenges to it, there's no question about that, but in some way, shape or form, some of it is going to get through,” said Sarhangian. “I do think there is a greater chance than not that it will ultimately positively impact the production of data centers.”
