Power Struggles, Mega-Projects, and What’s Up with Microsoft?
What a week at Data Center World 2025—new faces, fresh ideas and unforgettable moments at every turn. As the final day winds down, we’re checking in on the latest data center news making headlines, starting with another round of data center mega-projects and proposals pushing the limits of the power grid.
As we know, AI is fueling an unprecedented building boom, and while the industry races to keep up, a dose of reality is setting in: electricity isn’t infinite, and neither is patience. From Elon Musk’s latest grand vision to regulatory moves that could make expansion even trickier, the data center world is caught between ambition and infrastructure constraints. Let’s get into the latest data center news making headlines.
AI Data Centers Are Going Big—But Can the Grid Keep Up?
Memphis, Tennessee is the latest city to find itself in the crosshairs of the burgeoning AI infrastructure build-out. Sincepurchasing a 1-million-square-foot South Memphis property in early March, Elon Musk’s AI startup, xAI, has invested $400 million in the construction of a supercomputer facility packed with 200,000 Nvidia GPUs. But there’s a catch: the local power grid can only provide roughly half of the 300 megawatts the facility claims it needs. In an effort to bridge the gap, xAI is pushing for on-site gas turbines, prompting concerns from residents and environmental advocates. The Shelby County Commission has voted to have a public hearing about the issue.
xAI's pursuit of on-site power seems to echo a wider trend within the data center sector. AFCOM’s State of the Data Center report found that 62% of respondents are exploring on-site power generation to boost energy efficiency or resilience, with 19% already implementing it.
Meanwhile, Meta is making a massive bet on Louisiana with a $10 billion, 4-million-square-foot AI data center in Richland Parish. While this promises economic growth, concerns over the strain on the local power supply are already surfacing. Soif you live in Louisiana and your lights start to flicker, you might have Mark Zuckerberg to thank. Similarly, in Texas, a state experiencing a data center gold rush, lawmakers are pushing Senate Bill 6 to regulate energy consumption—a move that could either ensure grid reliability or make data center developers reconsider their love affair with the Lone Star State.
Small Reactors and Big Tariffs: The Battle Over Power Sources
With AI data centers consuming energy at unprecedented rates, the industry is scrambling for solutions. In a bid to meet soaring demands, small modular Reactor (SMR) firms in the U.S. are racing to scale up nuclear fuel supply chains through a flurry of deals and investments. These reactors could offer a more sustainable alternative to traditional power sources—assuming, of course, the nuclear industry can ramp up production fast enough to meet demand. No pressure.
At the same time,tariffs could soon throw another wrench into AI data center expansion. Proposed trade restrictions threaten to drive up the cost of critical infrastructure components, making it even more expensive to build the next generation of AI-ready facilities. As if finding enough power wasn’t already a headache, now companies based in the U.S. might have to pay even more for the privilege of expanding their data center footprint.
Regional Data Center Booms: A Blessing and a Burden
Texas remains one of the hottest data center markets, with Austin and San Antonio seeing a fourfold increase in colocation facilities over the past five years. But as power constraints mount, some developers are turning to electric cooperatives for alternative energy solutions.
Elsewhere, the race to build continues.Louisville, Kentucky is set to host an eight-building data center campus, while Atlanta is gearing up for an even bigger project—an 8.6 million-square-foot data center campus. The message is clear: if the traditional hubs can’t handle the growth, data centers will go wherever there’s power, land, and a willing local government.
Is Microsoft Reassessing Its Data Center Expansion?
In a plot twist that’s raising eyebrows across the industry, Microsoft has reportedly canceled data center projects totaling up to 2 gigawatts in the United States and Europe. According to analysts at TD Cowen, this move stems from an oversupply relative to Microsoft's current demand forecasts. The decision also reflects Microsoft's choice to forgo additional training workloads from OpenAI, despite its substantial investment in the company. Microsoft maintains that it will continue to grow in all regions, “strategically pacing” its infrastructure investments to align with future growth areas. Color us intrigued.
The Bottom Line
The AI data center surge is unstoppable, but the power grid is clearly starting to sweat. The industry's next moves—whether nuclear, legislative, or infrastructural—will show if it can keep the lights on without dimming everyone else's.