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Data centers are facing constraints with powering their facilities and finding land to build on, but so far capital hasn’t been a concern as private equity has jumped in feet first to finance this hot sector.
Grapski brings more than a decade of experience from Berkshire Partners, where he served as an operating partner in the portfolio support group.
April 30, 2026
PE has deployed about $320 billion into digital infrastructure and the total addressable market (TAM) is expected to reach $7 trillion by 2030, according to Tim Tracy, EY Americas private equity leader.
“PE firms are following where the money is going,” he says. “They understand how essential this infrastructure will be to future economic growth, and recognize the immediate and intense need for capital in this space.”
According to Boston-based PE firm Berkshire Partners, four years ago the size of the North American data center sector in North America was expected to reach 37 gigawatts by 2033. A year ago, that estimate grew to 67 gigawatts and more recently it grew to 90 gigawatts.
Managing Director Drew Walker expects the sector will need another $500 billion or more in the next five to eight years to build more data centers, and that doesn’t include the investment needed for new chips, servers, storage devices and networking gear that goes inside these centers.
“This industry faces a tremendous number of constraints, such as power, chips and access to necessary equipment and skilled labor. Capital isn’t one of the constraints, at least today,” he says.
Creative Investments
The ways that private equity has been investing in data centers are quite creative in the current environment, because there is so much capacity that needs to be delivered. There are investors that are focused just on the powered land, and there are other providers who are interested in providing a packaged solution with energy. Then there are investors investing minority stakes in emerging hyperscale data center platforms and existing established data center players.
According to Tracy, PE firms are getting involved in data centers in two ways: either by deploying credit and partnering with others to provide credit for building out; or they are entering into joint ventures where they take an equity interest in one aspect either with land, energy or AI architecture.
“The amount of investment has continued to ramp up, and PE firms are looking to get in on the opportunities where they can,” says Saul Ewing LLP Partner Michael Duffy.
Right now, things are moving so quickly that all forms of private capital are needed to fund these developers, according to Walker. “Infrastructure, real estate, and traditional private equity capital are all going in, along with a healthy amount of leverage, to fund the build out of data centers,” he says.
“We are going to need to pursue an ‘all-of-the-above strategy’ for power generation. This creates a lot of opportunities.”
One trend Walker has seen with PE firms is the investment in building out scaled parcels of shovel-ready data center land with power, water and fiber prepositioned, and zoning and entitlements complete, so that a developer can build a data center on that land quickly. “The biggest differentiators in the market for data center capacity right now are access to power and speed with which a data center can be delivered, so these land development platforms provide that solution,” he says.
Another investment trend is with power. “I think for the U.S. to supply the amount of power that is necessary to fulfill demand from AI, cloud and other applications, we are going to need to pursue an ‘all-of-the-above strategy’ for power generation, including small modular nuclear reactors, conventional natural gas, solar, wind and batteries,” Walker says. “This creates a lot of opportunities to invest across the energy ecosystem.”
One of the biggest growth trends that Duffy is seeing is the conversion of cryptocurrency mining centers into data centers, because cyptocurrency mining operators are looking to exit the market and they are in good locations that can provide the power needed.
PE funds are also showing interest in adjacent investments that benefit from data center demand tailwinds including everything from investing behind critical components to companies involved in the generation and distribution of electricity, Walker explains.
For example, Berkshire has invested inAHEAD, an IT services provider that builds platforms for digital businesses, as well asElectric Power Engineers, an engineering and consulting firm that is focused on grid reliability, grid resilience and energy transition.
Middle-market funds are also pushing into edge colocation, building smaller, decentralized data centers near end-users through greenfield platforms that can later be sold to larger operators.
“The middle market funds are less focused on the hyperscale side of the market, which requires billions of dollars of equity to develop,” explains Robert Huang, executive director at global infrastructure investment firm Morrison.
PE firms have been working to solve some of the constraints facing data centers. PE has the ability to work across multi-sectors and multi-vendors, and it’s their core expertise to bring them together.
“They are also looking at some of the older power companies to see if there is a carve-out that can be done to dedicate energy to these data centers, as the biggest hurdle that we have in the U.S. for data centers is power generation,” says Tracy.
“The opportunity set is so large that even the largest players haven’t been able to address and fulfill all of the demand.”
PE firms are getting into data center investments wherever they can, but they need to have a long-term outlook on the space in order to succeed.
“Data centers have become critical national infrastructure, and operators increasingly need long-term partners, not just balance sheet capital,” says Huang. “If you are a PE investor with a short-term horizon, it’s very difficult to invest successfully in a data center platform and help that platform realize its full value creation potential.”
With the rising need for data centers and the land, power and infrastructure to support growth, capital has been flocking to the space creating more competition for investments. Some expect this sector will be ripe for future consolidation.
“In the U.S., we have seen a lot of smaller players emerge, partly because the opportunity set is so large that even the largest players haven’t been able to address and fulfill all of the demand from the hyperscalers and the new customers that have emerged,” Huang says.
“In order to survive and succeed in this market, you really need to be delivering on time and on budget to your customers. At the moment there are too many players in the market and that will ultimately converge to scale operators with long-standing track records.”
