- Demand for data center capacity will rise sharply in 2026 due to AI and cloud growth
- Most new data center capacity is pre-leased to large tech firms, reducing vacancy risks
- Global data center electricity use is projected to reach 600 TWh in 2026, a 14% rise
The demand for global data center capacity to support artificial intelligence (AI), cloud computing and internet services will continue to rise sharply in 2026, according to Moody's Ratings. However, the race to build new data center capacity remains in its early stages with robust capacity growth poised to continue globally over the next 12 to 18 months, forecasts the leading financial services company.
According to Nidhi Dhruv, Vice-President, Moody's Ratings, the expectations for data centre growth is aligned with the International Energy Agency (IEA), which projects that the global capacity as measured by electricity consumption will reach about 600 terawatt-hours (TWh) in 2026, up 14% from an estimated 525 TWh in 2025, which is a 20% increase from 2024 actual consumption of 436 TWh.
In an exclusive interview with NDTV Profit on Jan. 19, Dhruv said that most of the growth remains in the US, which still contributes to half of the world's data centre capacity. ''Asia-Pacific is the second-largest data centre market and also the fastest-growing market over the next five years. Europe is a little slower, but to summarise, atleast all markets will experience double-digit growth in 2026.''
Moody's Ratings states that even larger hyperscale data center projects with capacity levels exceeding 300 MW will begin coming online in 2026, exponentially increasing capacity in some markets while also creating new markets. These new facilities will further accelerate the AI and cloud race. Most of this new capacity is pre-leased to large tech companies, or hyperscalers, limiting the risk of introducing a surplus of unoccupied capacity into the market.
In the Asia-Pacific, hyperscale, co-location and edge data centers in the region have combined capacity of about 16 GW, which Moody's expects will more than double over the next five years. These data centers make up about 60%-65% of APAC's total data center capacity, with enterprise data centers representing the rest. This reflects a compound annual growth rate (CAGR) of about 20% through 2030, and we estimate this growth will require investment of up to $900 billion.
Also Read: Beyond The Headlines: Where India's Data Centre Money Is Actually Flowing
China, Asia Pacific's largest data center market, will continue to grow but mostly within its own ecosystem through large tech companies, domestic developers, operators, and users. Overbuilding could be a concern in China as supply-demand imbalances and rapid technology shifts could lead to underutilized data center capacity, according to Moody's.
Dhruv also added that global data centres will require long-term funding for consistent growth and computing infrastructure over the next decade. The Moody's Vice-President quoted that the Asia-Pacific region will need about $900 billion worth capital funding and the number goes upto $3 trillion for the global data centres.
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