projects such as Stargate, the computation infrastructure project between OpenAI and Microsoft, as well as the Meta Hyperion 5 GW project in Louisiana, would single-handedly draw a maximum 5 GW of power. 4 These infrastructure projects are orders of magnitude larg­er than previous iterations of the cloud. This scale differ­ence poses challenges for the energy grids and power capacity as they stand, with some of the data centres building unpermitted natural gas and oil domestic power plants‘behind the wire’ to power these needs. The short­age of energy components has even led to some actors using repurposed aircraft engines to power the new data centres(James 2025). The investment required is also an order of magnitude high­er than for conventional cloud providers. 5 According to some estimates, 1 GW of AI compute required$50 bn of capital expenses investment, depending on various factors such as land availability and energy costs, which has led to a record $400 bn capital expenses on AI infrastructure in 2025(Bob­rowsky 2025). While much of the AI buildout has been fund ­ed by the dominant tech platforms, even hyperscalers have been forced to resort to external financing to manage the balance sheet implications of this scale of buildout. This new AI cloud has driven a shift in the traditional geography of data centres . In the United States, rural locations in states such as Texas, Indiana and Louisiana have become popular owing to the availability of cheap, level land and a relaxed approach to environmental permit­ting. In Europe, Nordic countries including Norway and Ice­land have emerged as core sites for AI compute expansion 6 , with significant projects underway in Southern Europe as well. 7 Microsoft is planning to invest€6.7 bn in data centre projects in the Spanish region of Aragón(Butler 2024), which has led to political frictions. Advocates for the data centre expansion cite the jobs created and value added for local economies. The European Data Centre Association suggests that the data centre expansion would lead to 80,000 jobs and add€83.8 bn to GDP by 2030(EUDCA 2025). More critical estimates point out that the actual employment effect is much lower, much of the investment spills abroad because of hardware purchases, and the land and energy implications are not given enough attention (Gabert-Doyon 2026). Estimates suggest that the majority of new data centre real estate is mainly driven by the largest hyperscalers. The latest and most accurate available data from datacen­terHawk , from the first half of 2024(see Figure 7), suggests that the largest buildouts still make up the bulk of the total data centre investments in the EMEA area. While this number does not distinguish between AI and conventional cloud, and also includes the Middle East, it gives a direc­tional estimate on the prevailing investment dynamics in the sectors. This estimate likely also substantially underes­timates the real hyperscaler footprint. Around 70–75 % of the built data centre capacity provided by colocation pro­viders such as Digital Realty and Equinix is contracted by hyperscalers(Boonstra 2023). Recently, some of the hyper ­scalers have scaled back their contracts, creating some openings for alternatives(Donnelly 2025). However, this comes with higher lease prices to compensate for the lower credit worthiness and more uncertain demand profile. 1.3 The emergence of the alternative AI cloud market: the search for computational alternatives Behind the shift in the macro environment, we also see a shifting composition of the market. The neocloud market emerged as a response to growing demand for special ­ised AI compute, known as AI accelerators. Following OpenAI’s release of ChatGPT in late 2022, a global surge in investment in generative AI research and development was accompanied by an insatiable demand for computation, particularly of high-end Nvidia chips. Hyperscale cloud pro­viders and leading AI labs raced to secure high-end chips and data centre capacity, which was unmet by the market due to Nvidia supply chain bottlenecks in chip production, the lead time for new data centre buildouts and energy interconnection capacity issues. This demand created a structural global scarcity of advanced chips. In response, the alternative AI compute providers, and par­ticularly neocloud providers, have pursued revenue diversi­fication strategies, by offering flexible contracts, special­ised infrastructure configurations and cheaper compute. According to a McKinsey report, there are currently just over 100 neocloud companies globally, of varying sizes (Mazza et al. 2025). The addressable market is therefore 4  Due to interconnection queue access problems, these gigawatt scale data centres are likely to be built in a modular fashion in increments of 100 to 200 MWs. We thank Advait Arun for this notion. 5  One could ponder what Sam Altman’s 250 GW of power by 2033 could imply financially or in terms of energy infrastructure buildout. His vision of 1 GW per week growth, ­announced in his blog at https://blog.samaltman.com/abundant-intelligence, seems to be out of sync with the material realities of any previous of large infrastructure project. ­See e. g. the analysis of Gardizy& Efrati 2025. 6  See announcements of Coreweave at https://www.coreweave.com/blog/coreweaves-european-expansion-lets-power-tomorrows-ai-innovations and https://www.datacenter-fo­rum.com/datacenter-forum/coreweave-and-bulk-infrastructure-partner-to-launch-one-of-europes-largest-ai-deployments-in-norway; of atNorth at https://datacentremagazine.com/ news/atnorth-grows-team-for-nordic-ai-data-centre-delivery; of Options Technology at https://datacentremagazine.com/news/options-technology-selects-atnorth-for-cloud-expan­sion; of Fluidstack at https://insidehpc.com/2025/03/fluidstack-to-deploy-exascale-gpu-clusters-in-europe-with-nvidia-borealis-data-center-and-dell/; of Verne and Nscale at https://www.verneglobal.com/news/news-verne-and-nscale; of Crusoe at https://www.crusoe.ai/resources/newsroom/crusoe-expands-iceland-data-center-capacity; of Verne and Ne­bius at https://www.verneglobal.com/news/news-verne-strikes-10mw-deal-with-nebius-to-further-expand-europes-ai-capacity; and of Nvidia at https://nvidianews.nvidia.com/news/ nvidia-partners-with-europe-model-builders-and-cloud-providers-to-accelerate-regions-leap-into-ai. 7  See for instance activity in Spain by Microsoft at https://www.datacenterdynamics.com/en/news/microsoft-gets-initial-approval-for-data-center-campuses-in-arag %C3 %B3n­spain/; and in Portugal, there is Start Campus´s Sines Data Campus: https://www.startcampus.pt/sines. 12 Friedrich-Ebert-Stiftung e.V.