The AI data center revolution is happening right in your backyard (2024)

If you use generative AI, you know that it can seem like magic. Chatbots and multimedia models can effortlessly conjure up poems or high-res videos at the snap of a finger.

But AI models’ speedy outputs and sleek interfaces mask the enormous amount of physical infrastructure behind them—and as AI continues to grow, the data centers and power plants that AI is built on are starting to get widespread attention outside of the industry.

Earlier this week, I took a train to Orangeburg, New York, a sleepy lower Hudson Valley suburb just 25 miles from Fortune’s newsroom in downtown Manhattan. I was there to visit one of a wave of AI infrastructure projects popping up across the country—Orangeburg is the future home of data center company DataBank’s newest site, named LGA3.

DataBank already operates two data centers in the New York metro area: one in Newark, New Jersey, and one in Chelsea, Manhattan. But LGA3 will be by far its biggest site—a $250 million, 200,000-square-foot facility drawing up to 45 megawatts of energy to power five massive data halls packed to the gills with computer chips.

The facility won’t open until next year, but tenants have already been booking space—most notably New Jersey-based AI startup CoreWeave, which recently secured an eye-watering $19 billion valuation and has already reserved almost half of LGA3’s capacity.

“The explosive growth in artificial intelligence has required a complete reevaluation of traditional data centers to meet demand for next-generation compute requirements, and this new data center campus provides some of the most advanced new technologies that will allow us to deliver for our customers,” CoreWeave founder Brian Venturo wrote to me in a note.

My taxi from the train station took no less than four wrong turns as we wound our way past farmhouses and office parks to the LGA3 construction site, wedged between an electrical substation and the New Jersey state line. Hopping out of the car, my first impression was the sheer size of the building. LGA3 looked about the size of a New York city block, a massive, single-story hall with high ceilings—I wouldn’t be surprised if you could fit a commercial jet inside.

‘Addicted to technology’

DataBank CEO Raul Martynek greeted me on the way in, wearing clear-rimmed glasses and a lavender button-down. Martynek has been in the internet infrastructure industry for decades, almost since the advent of the commercial internet in the 1990s. He’s been with Databank since 2017, overseeing the company’s 69 data centers across the U.S. and U.K. Martynek told me that he hasn’t seen an explosion in demand for digital infrastructure like the one AI is creating since the dot-com bubble of the late ’90s.

“Humans are addicted to technology, period. And ultimately, for the data center sector, what we do is we enable humans to deploy more technology,” Martynek told me. “If you deploy more technology, you need more fiber, more cell towers, more data centers. And for this particular phase that we’re in with AI, data centers are the bottleneck.”

The AI data center revolution is happening right in your backyard (1)

Nathan Howard—Bloomberg/Getty Images

A huge increase in demand from AI has catapulted data centers into front-page headlines. Martynek explained to me that most things we do online nowadays—from accessing images on our phones to scrolling social media to prompting ChatGPT—involve physical hardware more than we realize. Wi-Fi routers and cell towers are constantly sending signals through underground fiber optic cables to data centers and remote servers, accessing stored information and keeping the internet humming.

“The internet is a network, right? Information gets sent out over fiber optic cables as photons. And they travel around the world at close to the speed of light,” Martynek said. “I was hanging out with a network guy last night saying, ‘What do you do?’ He said, ‘We’re plumbers, right?’”

And these days, being a plumber is a good business. Exponential increases in the amount of data being generated for and by the internet over the past 20 years—and expectations that AI will only speed things up even more—mean that space to store all that information is in high demand.

“This device didn’t exist before 2007,” Martynek told me, pointing to his iPhone. “So think about how much content and how many applications have been created [by it.] All that stuff ends up in a data center…That’s the physical ecosystem.”

The AI data center revolution is happening right in your backyard (2)

Courtesy SourceCode Communications

AI boosts need for building space

Data centers might not be the sexiest projects, but a surge in demand from AI companies is bringing in big money, heavy press coverage, and some of the biggest names in construction. DataBank alone has spent around $4.5 billion on data center projects since 2016. AECOM Tishman, the construction company building LGA3, is one of the highest-profile names in the business: it worked on the World Trade Center and Chicago’s John Hanco*ck Center. A low-slung data bank next door to a suburban Little League baseball complex might seem an odd addition to its portfolio, but it’s betting that data centers will prove to be just as important as skyscrapers.

When I first got the invite to visit, the location surprised me. New York? Home to some of the highest real estate and energy prices in the country? Wouldn’t it be cheaper to build this in the middle of the desert, where land is cheaper and there’s access to bottom-dollar renewable energy?

But Martynek explained that for many customers, it’s just not practical to be located thousands of miles away from one of the most important parts of your business. New York is one of the country’s largest data center markets, with around 800 megawatts of capacity currently online, much of it catering to finance and tech companies who depend on nearby computing capacity to build and trade around the clock.

“It’s not practical for a data center to be in the middle of nowhere—there’s too much latency,” Martynek said, referring to delays in the response time between computers and offsite data centers. “Too many things can happen along the way.”

“Data centers have tended to cluster around metropolitan areas,” he continued. “New York has always been a pretty big data center market. That’s really a function of the population and a function of the businesses—if you’re JPMorgan, you don’t want your data center in Omaha.”

Public policy is also a factor. New York Governor Kathy Hochul unveiled the state’s Empire AI initiative earlier this year, which earmarked over $400 million to fund, among other things, infrastructure such as data center projects.

Donning a hard hat and reflective vest, I walked around the half-built structure with two construction managers. They pointed out the airplane hangar-sized area where the banks of computer chips would eventually be installed, along with the ventilation and water cooling to keep them from overheating.

Once construction is finished up, CoreWeave and DataBank’s other customers will start installing their chips, and DataBank expects the facility to be up and running in full by early next year. Once it’s online, CoreWeave will start leasing out its computing capacity to tech startups and other AI companies. Martynek told me DataBank hasn’t had any trouble finding customers.

“We signed the contract with CoreWeave last year. This building didn’t even exist then—it was just dirt. That’s how in-demand this product is,” Martynek said. “There’s a frenzy.”

As the saying goes, strike while the iron’s hot—DataBank is already putting together plans for another site right next door, LGA4. Next time you’re driving around town, keep an eye on the nondescript buildings in your area: The AI data center boom might be closer than you think.

Subscribe to the Eye on AI newsletter to stay abreast of how AI is shaping the future of business. Sign up for free.

The AI data center revolution is happening right in your backyard (2024)


How will AI affect data centers? ›

AI analysis enables data centers to predict potential threats and vulnerabilities, closing gaps in defenses before bad actors take advantage. Protecting data: By leveraging AI algorithms and techniques, data centers can improve data processing, storage, and security.

Where is AI now and where is it going? ›

AI is predicted to grow increasingly pervasive as technology develops, revolutionising sectors including healthcare, banking, and transportation. The work market will change as a result of AI-driven automation, necessitating new positions and skills.

Who is the father of artificial intelligence? ›

The correct answer is option 3 i.e ​John McCarthy. John McCarthy is considered as the father of Artificial Intelligence. John McCarthy was an American computer scientist. The term "artificial intelligence" was coined by him.

When was AI invented? ›

Birth of AI: 1950-1956

The term “artificial intelligence” was coined and came into popular use. Dates of note: 1950: Alan Turing published “Computer Machinery and Intelligence” which proposed a test of machine intelligence called The Imitation Game.

Who is most affected by AI? ›

Which industries have been the most impacted by AI?
  • Insurance and Finance: AI for risk detection and financial prediction. ...
  • Healthcare: AI to improve treatment efficacy and speed up diagnosis. ...
  • Industrial and energy sector: AI for sustainable, efficient and flexible production.
Nov 30, 2023

How will AI affect the Internet? ›

One way artificial intelligence (AI) will change the future of the internet is by making connections faster. With AI-powered networks, data can be transmitted faster and more efficiently. This means that you can expect to see faster download and upload speeds, as well as reduced latency.

Is AI a threat to humanity? ›

Can AI cause human extinction? If AI algorithms are biased or used in a malicious manner — such as in the form of deliberate disinformation campaigns or autonomous lethal weapons — they could cause significant harm toward humans. Though as of right now, it is unknown whether AI is capable of causing human extinction.

Is AI going to replace your brain? ›

After many dozens of hours of experimentation, my conclusion is that AI is not going to replace the need for a Second Brain anytime soon.

Who owns AI now? ›

Founded by Kate Crawford and Meredith Whittaker, the AI Now Initiative is an independent, interdisciplinary research initiative working to understand AI's social and economic implications.

What are the disadvantages of AI? ›

Lack of Creativity and Empathy: AI lacks human qualities like creativity and empathy, limiting its ability to understand emotions or produce original ideas. Cost and Complexity: Developing and implementing AI systems can be expensive, require specialized knowledge and resources.

Who is the god father of AI? ›

You have some eighty billion neurons sharing a hundred trillion connections or more. Your skull contains a galaxy's worth of constellations, always shifting. Geoffrey Hinton, the computer scientist who is often called “the godfather of A.I.,” handed me a walking stick. “You'll need one of these,” he said.

Who is the person behind AI? ›

Contributions in computer science. John McCarthy is one of the "founding fathers" of artificial intelligence, together with Alan Turing, Marvin Minsky, Allen Newell, and Herbert A. Simon.

Is Siri an AI? ›

Siri is Apple's voice-enabled virtual assistant powered by artificial intelligence, machine learning, and voice recognition. Using the commands "Siri" or "Hey Siri," you can activate Siri and ask it to perform various tasks, such as texting a friend, opening an app, pulling up a photo, or playing your favorite song.

Is AI good or bad? ›

Conclusion: AI is neither inherently good nor bad. It is a tool that can be used for both beneficial and harmful purposes, depending on how it is developed and used. It is important to approach AI with caution and responsibility, ensuring that it is developed and used in an ethical and transparent manner.

Why is AI booming now? ›

Introduction. Artificial intelligence (AI) has evolved fast in recent years, becoming a key disruptive force across a wide range of industries. This boom in AI use can be due to a combination of technology breakthroughs, increasing data availability, and increased awareness of its potential.

What is the growth rate of AI data centers? ›

How significant will the power demand growth from AI/data centers be? We forecast a 15% CAGR in data center power demand from 2023-2030, driving data centers to make up 8% of total US power demand by 2030 from about 3% currently. We now see a 2.4% CAGR in US power demand growth through 2030 from 2022 levels vs.

How will AI affect data analytics? ›

The combination of AI and data analytics allows data professionals to collect and interpret increasingly larger amounts of data faster and more efficiently.

How does artificial intelligence affect IT infrastructure? ›

AI can help predict when hardware failures or maintenance issues are likely to occur in IT infrastructure, such as servers and storage devices. This enables IT teams to take proactive measures to prevent downtime and reduce the risk of hardware failures.

How will AI affect cloud computing? ›

It streamlines time-consuming and repetitive tasks, reducing the potential for human error and boosting operational efficiency. In other words, the integration of AI into cloud computing allows businesses to do more with less, leading to higher productivity and lower costs.


Top Articles
Latest Posts
Article information

Author: Errol Quitzon

Last Updated:

Views: 6023

Rating: 4.9 / 5 (79 voted)

Reviews: 94% of readers found this page helpful

Author information

Name: Errol Quitzon

Birthday: 1993-04-02

Address: 70604 Haley Lane, Port Weldonside, TN 99233-0942

Phone: +9665282866296

Job: Product Retail Agent

Hobby: Computer programming, Horseback riding, Hooping, Dance, Ice skating, Backpacking, Rafting

Introduction: My name is Errol Quitzon, I am a fair, cute, fancy, clean, attractive, sparkling, kind person who loves writing and wants to share my knowledge and understanding with you.