While the debate rages over whether artificial intelligence can really deliver on the predictions and promises made about it, technology businesses are racing to build the infrastructure on which AI relies. And as demand for cloud computing and data center capacity surges—along with the power needed to run such assets—the M&A market is taking note.
Data center capacity will need to grow almost exponentially if the pace of AI adoption is to be sustained. McKinsey has estimated that capacity could rise at an annual rate of between 19 and 22 percent from 2023 to 2030, with other estimates noting that annual growth could average as much as 27 percent between now and then. That will require huge amounts of additional power, since processing a ChatGPT query, for example, uses ten times as much electricity as a Google search, according to the International Energy Agency. Meanwhile, Goldman Sachs predicts that, globally, data center power consumption will increase 160 percent over the next five years.
Much of this increase will inevitably take place in the US, which is expected to be the world’s fastest-growing data center market. McKinsey’s report suggests that in 2030, US data centers will consume 606 TWh of electricity, up from 147 TWh in 2023. That will put significant strain on US power networks, particularly as data centers are often sited in clusters in single locations.
Even in 2023, according to the Electric Power Research Institute, data centers consumed 26 percent of the total electricity supply in Virginia and considerable shares of the supply in states including North Dakota (15 percent), Nebraska (12 percent), Iowa (11 percent) and Oregon (11 percent). This level of consumption will only grow bigger over the next few years.
Data-driven dealmaking
Against this backdrop, both the US data center market and the energy industry that powers it have seen elevated M&A activity. With data center owners and operators positioning themselves for the growth to come, dealmaking has surged. The knock-on impact on demand for power is also driving M&A.
In the first nine months of 2025, the US data center market saw a total value of US$9.1 billion from 22 deals. This compares with deal value of US$11.6 billion, from 26 deals, in the corresponding period in 2024. However, at the time of writing (December 11), the 2025 total had increased to US$51.6 billion, a new annual record.
The largest deal of the year so far was announced in October, by a consortium including Blackrock, Microsoft and Nvidia, which is acquiring Texas-headquartered Aligned Data Centers from Macquarie Asset Management in a blockbuster transaction worth US$40 billion.
Other deals in the sector have been smaller but still include several significant transactions, such as power management company Eaton Corp’s acquisition of Fibrebond for US$1.4 billion. The transaction aims to increase Eaton’s share of the market for modular power solutions for multi-tenant and hyperscale data centers.
Power moves
US energy market M&A has seen similar growth. In the first three quarters of 2025, value rose to US$86.1 billion. This compares with total value of US$38.1 billion for all of 2024. However, in a similar pattern to data centers, volume has proved more modest this year, with 141 deals announced in Q1 to Q3, compared with 158 for same period in 2024. At the time of writing (December 11), value had risen to US$93 billion from 168 deals.
The top three energy sector deals of 2025 to date have all been worth more than US$10 billion—and demand from data centers has played a significant role in each. At the top of the list, independent power producer Calpine Corporation is to be acquired by the low-carbon energy giant Constellation Energy, a critical supplier to the US data center market, in a deal worth US$29.4 billion.
Elsewhere, NRG Energy, another major supplier to data centers, is increasing its scale through the US$12.5 billion acquisition of power generation assets from infrastructure firm LS Power. Meanwhile, private equity group Blackstone Infrastructure has agreed to pay US$11.8 billion for TXNM Energy, as it seeks to expand its presence in the data center market.
Power hungry
Stock market volatility in late November has underlined some of the question marks surrounding AI, particularly the extent to which claims made about adoption rates and returns on investment meet reality. However, the general direction of travel is clear, with huge sums committed to the rollout.
The US hyperscalers, of course, are all spending big. Microsoft is on track to spend US$80 billion on AI data center and cloud capacity by the end of the year, while Amazon is planning a US$100 billion data center expansion. Google’s investment commitments in AI infrastructure add up to US$75 billion, with much of that sum earmarked for the US.
The sector is also benefiting from the support of the US government. The Trump administration has committed to funding US data center infrastructure—providing a “Trump bump”—and is also backing developers and operators by easing planning restrictions and accelerating grid connections.
Private equity and infrastructure funds are also significant investors in the data center boom, both directly—as in the Blackrock-Aligned Data Centers deal—and in energy sector deals supporting it. Data from Preqin suggests infrastructure-focused dry powder stood at US$334 billion at the end of last year, while PE firms have deployed funds in a string of transactions across the sector in 2025, from transmission infrastructure to power generation.
Deal dilemmas
Despite this phenomenal growth, there will be bumps along the way. One reason deal volumes in the US have faltered this year is that dealmakers have begun to question whether valuations are sustainable at current levels. With so much capital flooding into the sector, prices have surged ever higher.
Competition is also a concern. The scale of investment required, and the fact that a relatively small number of platforms have grown rapidly, is reducing the potential number of candidates for any deal. PE buyers are beginning to consider whether and how they would be able to pursue exits.
The broader issue is the extent to which geopolitical uncertainties, including US trade tariffs, will weigh on the market. To some extent, a bet on AI—and, even more so, on the overall power sector—is a bet on global economic growth. The scope for disruption from political tensions and outright conflict is significant and could impede dealmaking.
Data driving dealmaking
Despite these concerns, the current outlook looks bright. Demand for data center capacity continues to outstrip supply, particularly in the fast-growing digital clusters dotted around the US. And while top-of-the-range estimates of future capacity needs may prove overdone if AI—particularly generative and agentic AI—does not start to deliver substantive returns on investment, more data centers will still be needed.
Similarly, the power sector has significant catching up to do just to support the AI expansion already underway. US data centers consumed 183 TWh of electricity in 2024, according to International Energy Agency estimates—representing more than 4 percent of the country’s total electricity consumption last year, and roughly equivalent to all of Pakistan’s.
The drivers for further M&A activity remain powerful. In both the data center sector and in power more broadly, the stage is set for further dealmaking ahead, particularly if AI starts to deliver on its promises.
