Cloud Computing Growth and Data Center Expansion

Alibaba Group Holding Ltd has launched a new data center in China featuring its own proprietary AI chips. This development aligns with a broader trend of cloud providers integrating custom silicon to handle the increasing demands of artificial intelligence and generative AI workloads.

Cloud computing has been among the fastest-growing business segments for Alibaba in recent quarters. The company is intensifying its focus on building large-scale data centers to support this growth, particularly as the industry shifts toward AI-centric infrastructure.

The Global Data Center Landscape

Alibaba’s expansion occurs within a global market experiencing a significant infrastructure investment cycle. According to data from JLL, the global data center sector is projected to expand at a 14% compound annual growth rate (CAGR) through 2030.

The demand for AI and cloud services is driving a rapid increase in capacity. JLL reports that nearly 100 GW of new data centers are expected to be added between 2026 and 2030, which would effectively double the global capacity to 200 GW by 2030.

This growth is accompanied by immense capital requirements. JLL estimates that an investment of up to $3 trillion is required for 100 GW of new supply by 2030, including $1.2 trillion in real estate asset value and an additional $1 to $2 trillion for IT equipment fit-outs.

Shift in AI Workloads

The technical requirements for these data centers are evolving. In 2025, AI represented approximately one-quarter of all data center workloads, with training being the primary driver of demand.

However, a shift is anticipated by 2027, when inference workloads—the process of using a trained AI model to make predictions or generate responses—could overtake training as the dominant AI requirement. By 2030, AI could represent half of all data center workloads.

Market Trends and Infrastructure

The broader industry is seeing a transition toward hyperscale expansion and new cooling technologies. Global Markets Insights notes that liquid cooling is blooming and energy efficiency is becoming a priority as data traffic grows.

In the United States, the market size for data centers was valued at $171.9 billion in 2025. The global market size was estimated at $527.46 billion in 2025, with a forecast to reach $739.05 billion by 2030.

The core infrastructure supporting these operations—including power systems, cooling systems, and networking devices—was valued at $62.5 billion in 2023 and is expected to grow at a CAGR of 12.5% to reach $183 billion by 2032.

Energy and Economic Impact

Rapid digitalization has led to a vertical spike in investments. The International Energy Agency (IEA) reported that capital expenditures by Google, Microsoft, and Amazon in 2023 surpassed the entire U.S. Oil and gas sector’s market investments, representing approximately 0.5% of GDP.

To manage grid constraints, the sector is increasingly turning to on-site power and battery storage. Data center construction costs have been increasing at a 7% CAGR.

Local governments are increasingly viewing these facilities as catalysts for economic growth, with promises of job creation during the construction phase and increased tax revenue.