Kyle M. Wool CEO, Dominari Securities
Christopher R. Schiavello VP, Investment Banking & ECM
Traditional data centers began as privately owned facilities to house IT infrastructure – servers, storage systems and networking equipment - for the exclusive use by one company. The centers support the centralization of computer processing power and the storage and distribution of data across an enterprise. They are engineered for high-speed connectivity, energy efficiency and scalability and are absolutely critical for enabling digital operations. As a follow-up to our previous article on Artificial Intelligence (AI), we want to take a deeper dive into the opportunities ahead for this growing sector of the global market.
Global reliance on cloud computing and proliferation of AI applications is driving explosive growth in demand for more data centers
AI workloads require significant computational power and more specialized data centers that are designed and optimized specifically for AI applications. In terms of magnitude, (1)it is predicted that by 2030, data centers will use 8% of the power in the United States. U.S. utilities companies will need to invest up to $50 billion in power assets and infrastructure to support the expected increase in the number and magnitude of data centers. “AI compute” requires exponentially more computational resources to perform tasks.
Big tech leading the charge in data center development
Big tech companies, including Microsoft, Amazon, Google and Meta, are investing billions to expand their cloud and AI capabilities while chipmakers such as NVIDIA and AMD are playing a pivotal role in producing the AI-specific hardware that powers new data center facilities. (2)Microsoft, which has invested billions in OpenAI, has spent more than $10 billion in past quarters on cloud-computing capacity and is planning to double its data center capacity.
(3)Elon Musk, through his AI company xAI, is a recent notable player. He is building the largest supercomputer located in Memphis, Tennessee, to support xAI’s ambitions. He plans to acquire 100,000 NVIDIA chips, part of an initiative backed by a $6 billion funding round at a $50 billion valuation. AI investments in privately held companies like xAI are available from some investment banks, like Dominari Securities.
AI data center development is a focus of U.S. public policy
The White House created its ‘Task Force on AI Data Center Infrastructure’ to prioritize AI data center development as a matter of national security and economic interest. CEOs of the biggest data center operators and tech firm - CoreWeave, QTS, Google, AWS, Meta, Microsoft, NVIDIA, OpenAI and Anthropic – along with utility industry leaders to advance data center development and help ensure that the U.S. maintains its competitive edge in AI infrastructure.
AI data center market is a multi-billion-dollar opportunity
According to McKinsey & Company, the data center industry is projected to grow at a compound annual growth rate (CAGR) of 10% through 2030 with global spending on new data center construction expected to reach $49 billion annually by the end of the decade.
In North America, data center inventory (4)grew by 24.4% year-over-year in Q1 2024, driven by demand from AI and cloud services. Data centers are the backbone of the AI revolution, providing the infrastructure needed to power innovation across industries. With billions of dollars in investments, rising demand and exponential AI growth, data centers represent a high-growth opportunity for forward-looking investors. Ensuring sufficient infrastructure to support the growth of AI companies will be critical in the years ahead.
For more information about AI investments or other opportunities, please contact info@dominarisecurities.com and a registered representative will follow up with you.
- https://www.forbes.com/sites/markminevich/2024/10/28/ai-data-centers-and-the-new-era-of-unprecedented-demand/
- https://time.com/6987773/ai-data-centers-energy-usage-climate-change/
- https://www.cbre.com/insights/reports/global-data-center-trends-2024
- https://www.wsj.com/tech/ai/elon-musks-startup-xai-valued-at-50-billion-in-new-funding-round-7e3669dc
Disclosures
My family and I individually own AAPL, CEG, CLS, CRDO, MSFT, NVDA, OKLO, SMCI, SMR, TSLA, VRT and VST in the public market. My family and I individually own Cerebras Systems, Groq, SpaceX and xAI in the private market via Dominari Master Series SPV’s Dominari Holdings, the parent company of Dominari Securities, owns Cerebras Systems, Groq, and xAI in the private market via Dominari Master Series SPV’s.
Kyle Wool is a registered representative of Dominari Securities, LLC (DS), a registered broker-dealer that does not provide tax or legal advice. Nothing contained herein is investment advice and a reference to a particular investment or security, a credit rating or any observation concerning a security or investment provided by Dominari Securities is not a recommendation to buy, sell or hold such investment or security or make any other investment decisions.
The material presented herein is for informational use only by agents of existing and prospective customers of the presenting representative and does not reflect the views of DS management. This information may not be duplicated or redistributed without prior consent of DS and distribution, or publication of this material does not represent a solicitation to complete a financial transaction with the firm. Though information was prepared from sources believed reliable, DS does not guarantee its accuracy or completeness. Securities offered by DS (1) are not insured by the FDIC (Federal Deposit Insurance Corporation) or by any other federal government agency; (2) are not bank deposits; (3) are not guaranteed by any bank or bank affiliate; and (4) may lose value. DS is located at 725 Fifth Avenue, New York, NY 10022, (212) 393-4500. Past performance is no guarantee of future results.
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SOURCE: Dominari Holdings Inc.
