The data center market is experiencing unprecedented growth, driven primarily by the increasing demand for artificial intelligence (AI) infrastructure. This surge in demand has led to a significant influx of capital, with companies like DataBank raising billions to meet the needs of their enterprise clients. Just last week, OpenAI announced plans to team up with backers, including SoftBank, to spend at least $100 billion on data center infrastructure in the U.S. Microsoft has also committed to investing around $80 billion in AI infrastructure this year, with rival tech giants following suit.

Firms that provide high-performance compute-ready data centers, such as DataBank, are reaping the benefits of this trend. The company recently announced that it has raised $250 million in an investment from private equity firm TJC and an additional $600 million in a secondary share offer. This new capital brings the total amount raised by DataBank in the past year and a half to a staggering $5 billion.

DataBank's CEO, Raul K. Martynek, expressed confidence in the company's strategy and ability to execute and scale, citing the new capital as a signal of confidence from investors. The company, founded in 2005, has expanded its footprint through acquisitions, including the purchase of Indianapolis-based data center provider Lightbound in 2018 and zColo's U.S. and U.K. data center assets in 2020. Today, DataBank manages over 65 data centers across more than 27 markets.

The growth of DataBank and other data center providers is closely tied to the increasing demand for AI infrastructure. As AI workloads continue to grow, companies are seeking reliable, scalable, and energy-efficient infrastructure to support their operations. This has led to a boom in the market for "neocloud" startups, such as Crusoe, which are building low-cost, on-demand clouds primarily for AI workloads.

Other companies in the sector are also seeing significant investment. CoreWeave, a GPU infrastructure provider with several Big Tech partnerships, is valued at $19 billion. Lambda Labs secured a special-purpose financing vehicle up to $500 million last April, while the nonprofit Voltage Park announced it is investing $500 million in GPU-backed data centers in October 2023. Together AI, a cloud GPU host that also conducts generative AI research, landed $106 million in a Salesforce-led round last March.

According to a McKinsey report, capital spending on procurement and installation of mechanical and electrical systems for data centers could eclipse $250 billion in the next five years. While this growth is undoubtedly exciting for companies in the sector, it also raises concerns about the environmental externalities of data centers, including their high water usage. As the market continues to grow, it will be important for companies to prioritize sustainability and mitigate their environmental impact.

Despite these concerns, the data center market shows no signs of slowing down. With AI demand driving growth and investment pouring in, companies like DataBank are well-positioned to capitalize on the sustained demand for reliable, scalable, and energy-efficient infrastructure. As the market continues to evolve, it will be important to monitor its impact on the environment and the broader tech industry.