With AI boom in full force, 2024 datacenter deals reach $57B record

Datacenter merger activity soared to new heights in 2024, with $57 billion in deals closed over the 12 months. If you're looking for a reason, you guessed it: anticipated gains around generative AI. 

Synergy Research Group has reported that 2024 saw an all-time high in datacenter M&As, surpassing the record set in 2022 by an additional $5 billion. When deals in excess of $2 billion are removed from the equation, 2024 saw M&A activity more than double compared to the record set in 2022, which was primarily boosted by a pair of massive alliances that closed that year. 

It was a banner year for M&A deals, both small and large - Click to enlarge

In other words, 2024 saw a number of smaller deals far in excess of previous years. Synergy's data doesn't only include outright acquisitions, but also includes equity investments, joint ventures, share sales and land purchase for datacenter projects, which can mean only one thing: Datacenters are so hot right now. 

"There has been a tremendous increase in the demand for datacenter capacity, driven by cloud services, social networking and a range of both consumer and enterprise digital services," Synergy chief analyst John Dinsdale said of the numbers. "There is no end in sight to this trend, with generative AI technology and services adding a further boost to already strong demand." 

Specialist operators, Dinsdale said, simply haven't been able to fund necessary investments to grow their DC footprints, and private equity has been all too happy to step up given the booming market. Synergy said private equity only accounted for 65 percent of closed deals in 2021; since then it has hovered in the 80 to 90 percent range. 

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Dinsdale claimed much of the 2024 deal frenzy could be attributed to demand around AI.

Late last year, Canalys CEO Steve Brazier pointed out AWS, Google and Microsoft had invested $200 billion in capital expenditure into AI infrastructure - datacenters - from the start of 2023 until September 2024, and yet less than a tenth of that, he estimated, had actually translated into licenses bought by customers.

Analysts The Register spoke to in 2022 about that year's datacenter boom, who attributed it in large part to new distributed computing models leading to growth in smaller datacenters, and forecast an AI growth factor way back then.

Synergy Research said that an additional $29 billion in datacenter deals were agreed to, but not closed, in 2024, and Synergy "is also aware of a pipeline of well over $15 billion in possible future deals, where companies are seeking new sources of funding or considering strategic options."

"Looking at pending deals and the future pipeline, there is plenty of evidence to suggest that 2025 will be another boom year for datacenter M&A," Dinsdale said. ®