Industry executives and experts share their predictions for 2026. Read them in this 18th annual VMblog.com series exclusive.
By Tom Traugott, SVP of Emerging Technologies at EdgeCore Digital Infrastructure
After a transformative 2025, the data center industry enters 2026 at an accelerated pace. Last year, we saw AI workloads surge, new capital emerge, and grid pressures increase – pushing past prior boundaries of scaling infrastructure and putting power and data centers in the spotlight.
Looking ahead, these trends will only intensify. The continued expansion of AI – scaling up, out, and across – translates to more compute needs leading to greater power requirements, financing models, and even the geography of data center infrastructure itself. Heading into 2026, I suspect we’ll see:
1. A Second Wave of AI Innovation
The momentum from 2025 is carrying into 2026. We’ll see the true �second wave’ of AI innovation, driven not by new algorithms, but by the arrival of massive compute capacity finally coming online. Over the past year, leading organizations like OpenAI have hinted at projects they can’t yet launch due to compute constraints. That’s about to change.
The world’s largest super-scale clusters are only in their infancy, with several just beginning to come online. As they do, we’ll see breakthroughs that have been quietly waiting in the background, including new multimodal models, real-time video generation tools that go beyond Sora, and entirely new categories of AI services. Many of the business concerns around cost, scalability, and accessibility will start to ease as this infrastructure matures. Expect surprises – some truly magical – because, at this point, we still don’t know what we don’t know. With these compute breakthroughs on the horizon, the next question becomes: who is funding the infrastructure to make it all possible?
2. A Growing Flow of Investments
2026 will mark the beginning of an unprecedented capital storm in data center infrastructure. The expected 15 gigawatts of U.S. data center leasing activity in 2025 alone demands roughly $150 billion in infrastructure funding – before even accounting for the $600 billion in chips that will power those facilities. With interest rates expected to move meaningfully lower, a massive wave of capital – both equity and debt – will be unlocked, accelerating projects across every major hyperscale and colocation market.
That’s only the beginning. Leasing is projected to jump another 25% in 2026, pushing total capacity demand toward 19 GW and setting another record. The trajectory of compute demand is staggering as training runs that consume 150-200 MW today could reach multi-gigawatt scales by 2030. Additionally, AI power requirements in the U.S. could balloon from 5 GW today to 30-70 GW by 2030. Every year, the industry breaks new records, and in 2026, the flood of capital chasing AI infrastructure will redefine the boundaries of scale.
3. Emerging Data Center Hot Spots
As investment streams grow, choosing the right locations for new capacity will become a critical differentiator in the data center race. While massive campuses are emerging in what some call �the middle of nowhere,’ proximity to both power and population centers is becoming increasingly complex – yet critical.
The evolving rules around AI training and inference are putting new pressure on latency, making speed a deciding factor much like it was in the early days of search engines. I expect continued growth in key markets, and a surge of development in adjacent, power-rich areas like Central Virginia and Indiana which are close enough to connect, but scalable enough to host gigawatt-class facilities spanning 500+ acres.
The challenge is no longer finding land – it’s securing power. The �powered land’ heyday of the last 5-10 years is increasingly over, with interconnection and grid upgrade costs now materially exceeding land value. As the grid struggles to keep pace, natural gas will continue to serve as a crucial bridge to sustainable baseload solutions like geothermal and new nuclear. The new geography of AI infrastructure will be defined not just by space, but by speed and power.
4. New Players in Grid Conversations
As power continues to be a limiting factor to development, data centers are stepping into a more proactive role with the energy grid. Next year, data centers will be key players in stabilizing the grid and mitigating cost increases by securing strategic investment and promoting load flexibility via load shedding or curtailment. While increasing both grid utilization and revenue to utilities can help reduce costs for ratepayers, new investment and supply to the grid via storage and on-site generation will help data centers drive grid expansion and modernization for diverse uses. Additionally, when utilities are rewarded for collaboration rather than protecting reserved capacity, data centers are poised to become a key stabilizing force in the energy transition.
5. New Approaches to Financing
In 2026 the financing playbook for AI infrastructure will continue to evolve – and Big Tech will be writing the rules. High-growth, cash-flow negative, innovative AI startups aren’t as financeable through traditional commercial real estate or project finance lending channels as their credit profiles don’t fit the mold. To bridge that gap, the world’s largest companies like NVIDIA, Oracle, Amazon, Microsoft, and Google are stepping in, leveraging their balance sheets and credit ratings to de-risk these ventures.
This �balance sheet weaponization’ is transforming the financing landscape, giving traditional lenders the confidence to fund projects that would otherwise be perceived to be too risky. We’ll see even more strategic alliances like the $100 billion NVIDIA and OpenAI collaboration to back 10 GW of compute capacity, which appears to align with data center value moreso than with chip costs.
These partnerships are no longer exceptions – they’re becoming the model. With 15 GW of leasing in 2025 and billions in chips tied to those deals, this kind of creative financing will only accelerate. Expect the biggest tech players to keep absorbing counterparty risk and doubling down on AI’s long-term promise.
The New Era of Data Centers and AI Infrastructure
By the end of 2026, the data center landscape will look fundamentally different. What was once a niche commercial real estate asset class is now evolving into one of the most strategically important sectors of the global economy. As investment accelerates and infrastructure expands, the developers that can navigate this intersection of technology, energy, and capital will define the next decade of innovation.
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ABOUT THE AUTHOR
Tom spearheads EdgeCore�s understanding and adoption of emerging technologies with a current focus on the impacts and demands of AI on the data center ecosystem. While interacting with a broad spectrum of technologists, industry thought leaders, and community stakeholders, Tom ensures that EdgeCore stays at the forefront of innovation, geographic expansion, and future trends in order to deliver on the company�s promise to provide safe, sustainable, and futureproof data center solutions to the world�s largest cloud and technology companies. Tom�s industry experience began in the post-dot com early 2000s period and stretches through the rise of enterprise wholesale colocation in the 2000s, through the rise of hyperscale cloud in the 2010s, and now generative AI driven world.
Tom holds a B.A. in Social Studies from Harvard College, with honors.
