As AI infrastructure expands beyond traditional technology hubs, emerging markets could become increasingly important destinations for data center investment — but power availability, financing, regulation, water, connectivity, and local demand will ultimately determine which markets succeed.
The global artificial intelligence boom is creating one of the largest infrastructure investment cycles the technology industry has ever experienced. Much of the attention has understandably focused on the United States, where hyperscalers and AI companies are planning enormous data center campuses and competing aggressively for land, electricity, fiber, equipment, and generation capacity. But the next phase of the AI infrastructure buildout may increasingly extend beyond traditional data center markets.
The International Finance Corporation (IFC), the private-sector arm of the World Bank Group, has been examining this shift closely: what happens when data center and AI infrastructure investment moves deeper into emerging markets? The potential is significant. Emerging economies can offer growing populations, rapidly expanding digital demand, renewable energy resources, available land, developing cloud markets, and the opportunity to build infrastructure closer to the people and businesses ultimately consuming digital services. At the same time, these markets can introduce risks involving grid reliability, financing, regulation, water availability, connectivity, and political stability.
The result is a fascinating investment equation. Emerging markets could become one of the next major frontiers for global data center development, but simply finding inexpensive land and electricity won't be enough. Successful projects will require developers to think simultaneously like technology companies, energy developers, infrastructure investors, and long-term economic-development partners.
AI Is Beginning to Change the Geography of Data Centers
Historically, hyperscale data center development has concentrated around established digital hubs where developers could rely on mature power infrastructure, dense fiber networks, sophisticated capital markets, predictable regulations, and large concentrations of enterprise customers. Northern Virginia, Silicon Valley, Dallas, Phoenix, Dublin, Frankfurt, Singapore, and other major markets became data center centers because an ecosystem already existed to support large-scale digital infrastructure.
AI is beginning to challenge that model. The amount of electricity required by the next generation of computing infrastructure is becoming so large that some established markets are encountering constraints involving grid capacity, transmission infrastructure, land availability, permitting, and water. At the same time, demand for cloud computing and AI services is expanding globally, creating an economic argument for developing additional computing infrastructure closer to emerging centers of demand.
This creates an opportunity for countries across Southeast Asia, Latin America, Africa, India, the Middle East, and other developing regions. Some of these markets possess substantial renewable resources, lower land costs, growing populations, expanding digital economies, and governments eager to attract technology investment. Recent global investment patterns already show meaningful AI and data center capital flowing into emerging economies including Brazil, India, Malaysia, and Thailand.
The important question is no longer whether data center development will expand geographically. It almost certainly will. The more difficult question is which emerging markets possess the combination of power, connectivity, capital, regulation, infrastructure, and demand necessary to support sustainable long-term growth.
Power Will Determine Which Markets Win
For all the discussion surrounding AI technology, one factor continues to dominate data center development: electricity. A market can offer inexpensive land, favorable taxes, strong economic growth, and supportive government policies, but none of those advantages matter if developers cannot obtain reliable power at the scale required by modern AI infrastructure.
This challenge can be even more pronounced in emerging economies. Some markets already struggle with electricity shortages, transmission congestion, aging infrastructure, or reliability issues affecting existing residential and industrial customers. Adding a 100 MW, 300 MW, or eventually gigawatt-scale data center campus to such a system can fundamentally change the local electricity equation.
IFC's broader analysis of AI investment in emerging markets specifically identifies energy infrastructure as one of the structural requirements for sustainable AI development, and warns that rapid hyperscale data center expansion can strain existing energy systems and potentially compete with essential public services in markets where grid capacity is already limited or unreliable.
That means emerging-market data center development can't simply be a real estate exercise. Developers may need to participate directly in the energy solution through renewable PPAs, dedicated generation, battery storage, microgrids, or behind-the-meter power.
In some locations, that requirement could actually become an advantage. Countries with excellent solar, wind, geothermal, hydroelectric, biomass, or other energy resources may be able to develop integrated energy-and-compute campuses specifically designed around large digital loads. Rather than replicating the traditional data center model, emerging markets have an opportunity to build a newer one.
Data Centers Can Become Catalysts for Energy Infrastructure
There's another side to the power equation that deserves more attention. Data centers don't simply consume electricity; under the right structure, they can help finance new energy infrastructure.
A hyperscale customer willing to sign a long-term electricity agreement can provide the predictable demand necessary to support investment in new generation. A large data center campus can potentially anchor renewable projects, battery storage systems, transmission upgrades, substations, and other infrastructure that might otherwise struggle to obtain financing.
Malaysia is already a working example of this model. IFC partnered with hyperscale operator Yondr to de-risk construction of a data center in Johor Baru through early-stage financing that wasn't available from commercial lenders — a 300 MW, 72.5-acre campus, since acquired by Vantage Data Centers, now positioning Malaysia as a regional digital infrastructure hub. The catalytic financing helped mobilize additional commercial capital and is expected to attract further digital investment, create local jobs, and generate spillover benefits across Southeast Asia.
This creates the possibility of a mutually beneficial development model. Instead of viewing a data center solely as another enormous load competing for limited electricity, governments and utilities can evaluate whether the project can help accelerate investment in the broader energy system.
The distinction is critical. A poorly planned 500 MW campus connected to an already constrained grid can create serious challenges. A 500 MW campus developed alongside dedicated generation, storage, transmission upgrades, and appropriate utility planning can become a catalyst for infrastructure investment.
The best emerging-market projects will likely be those where digital infrastructure development and energy infrastructure development occur together.
Renewable Energy Could Become a Competitive Advantage
Many emerging economies possess something particularly valuable in the AI era: abundant renewable energy resources that haven't yet been fully developed.
Regions with strong solar irradiation, consistent wind resources, hydroelectric capacity, geothermal potential, or biomass feedstocks could potentially use those resources to attract data center investment. The opportunity becomes especially interesting when renewable generation can be combined with battery storage, grid connectivity, and firm generation to create reliable hybrid energy systems.
For developers, access to low-cost renewable electricity can reduce long-term operating expenses while helping hyperscale customers meet increasingly important sustainability objectives. For host countries, data center demand can potentially create another source of long-term contracted revenue supporting additional generation development.
The challenge is reliability. A data center can't simply shut down when the sun sets or the wind stops. Renewable-rich emerging markets therefore need to think beyond installed renewable capacity and focus on deliverable 24/7 power, incorporating storage, transmission, dispatchable generation, grid interconnections, and intelligent energy management.
The countries capable of converting abundant renewable resources into dependable digital infrastructure power could gain a significant competitive advantage.
Water and Cooling Cannot Be an Afterthought
Power receives most of the attention in data center discussions, but cooling represents another major infrastructure consideration, particularly as AI rack densities increase.
Traditional data centers consumed substantial electricity simply moving air through server environments. AI computing is accelerating the transition toward more advanced cooling architectures, including direct-to-chip liquid cooling and immersion cooling. IFC's analysis highlights cooling and thermal management as important components of AI-ready infrastructure, noting that advanced cooling technologies can improve overall energy efficiency.
This becomes especially important in emerging markets where water scarcity may already represent a significant economic and social challenge. Developers can't assume that large quantities of potable water will always be available — or socially acceptable — for cooling enormous computing facilities.
Site selection therefore needs to evaluate water availability with the same seriousness as electricity. Closed-loop cooling, reclaimed wastewater, air-cooled systems, liquid cooling, and other technologies can reduce dependence on potable water, but each approach affects capital costs and energy consumption differently.
The strongest projects will design the power, water, and cooling systems together, rather than treating them as independent engineering decisions.
Connectivity Still Matters
Cheap power alone doesn't create a viable data center market. Digital infrastructure ultimately needs to connect users, applications, cloud platforms, and other data centers.
Markets with multiple subsea cable connections, terrestrial fiber routes, internet exchanges, carrier-neutral facilities, and strong regional connectivity are naturally better positioned to attract hyperscale and cloud infrastructure. Redundancy is particularly important because a major data center can't depend on a single fiber route any more than it can depend on a single source of electricity.
This creates an interesting development opportunity for countries located along major international connectivity routes. Investment in subsea cables and fiber networks can increase the attractiveness of data center development, while additional data center demand can justify further investment in telecommunications infrastructure.
Power and connectivity therefore reinforce one another. A market with abundant electricity but poor fiber infrastructure may struggle to attract major computing investment, while excellent connectivity without sufficient power creates the opposite problem. The winning markets will need both.
Capital Is Available, but Not Every Project Is Financeable
The enormous investment flowing into AI can sometimes create the impression that virtually any proposed data center will receive financing. Emerging markets make clear why that assumption is dangerous.
Data centers are extremely capital-intensive infrastructure assets. Investors and lenders must evaluate the sponsor, customer contracts, power availability, construction costs, political environment, currency exposure, regulatory framework, operating experience, and long-term demand before committing capital.
IFC's investment experience highlights another important consideration: these projects aren't simply real estate investments. Data centers combine real estate, telecommunications, energy, technology, infrastructure, and sophisticated customer relationships within a single asset class. Sponsors therefore need both sufficient capital and the operational experience necessary to manage multiple forms of risk simultaneously.
That could favor regional platforms and experienced operators capable of developing multiple facilities rather than speculative developers pursuing isolated projects. A strong sponsor with existing hyperscale relationships, proven operating experience, and a scalable regional strategy can provide investors with considerably greater confidence than a developer entering the industry for the first time.
AI Infrastructure Can Produce Broader Economic Benefits
The opportunity for emerging economies extends beyond construction spending or electricity sales. Data centers increasingly represent foundational economic infrastructure.
Cloud services, financial technology, digital government, e-commerce, telecommunications, healthcare, manufacturing, logistics, and artificial intelligence all depend on computing infrastructure. Developing local or regional data center capacity can reduce latency, improve digital resilience, support data-sovereignty requirements, and provide businesses with better access to cloud and AI services.
IFC's recent investment supporting two AI-ready data centers in India provides an example of this broader strategy. The facilities are intended not only to provide computing capacity but also to support cloud services, AI adoption, private investment, economic competitiveness, and employment while emphasizing energy efficiency and sustainability.
This is where the development impact becomes particularly interesting. A data center itself may not employ tens of thousands of people once operational, but the digital ecosystem supported by that infrastructure can influence a much larger portion of the economy. The real economic value is therefore not simply the building filled with servers. It is the digital activity those servers enable.
Emerging Markets Have an Opportunity to Leapfrog Traditional Infrastructure
One of the most compelling possibilities is that emerging markets may not need to replicate every stage of data center development experienced by mature economies.
Countries building new digital infrastructure today can design facilities around AI workloads from the beginning — incorporating liquid cooling, renewable generation, battery storage, advanced power-management systems, modular construction, high-density computing, and more efficient networking without retrofitting decades-old infrastructure.
The same principle applies to electricity systems. Instead of building an entirely traditional centralized grid before integrating distributed energy resources, some markets could develop renewable generation, storage, microgrids, smart metering, and digital grid-management technologies simultaneously.
This ability to leapfrog older infrastructure models has occurred before — many developing economies moved directly toward mobile communications without constructing the extensive fixed-line telephone infrastructure found in developed countries. AI infrastructure could create a similar opportunity.
The Risks Cannot Be Ignored
The opportunity is substantial, but emerging-market investment requires disciplined risk assessment. Political and regulatory changes can affect foreign investment, energy markets, taxation, data sovereignty, and permitting. Currency volatility can create significant financial exposure when project revenues and debt obligations are denominated differently. Supply chains can complicate equipment procurement, while shortages of specialized engineering and technical talent can affect construction and operations.
Energy policy is particularly important. Electricity tariffs in some emerging markets may be influenced by subsidies, government intervention, fuel prices, or currency movements. A power price that appears extremely attractive today may not necessarily remain competitive over the 15- or 20-year life of an infrastructure investment.
Developers also need to consider community impact. A massive data center consuming electricity and water in a region where residents face shortages can quickly become politically controversial. Successful development therefore requires demonstrating that digital infrastructure investment creates broader economic benefits rather than simply consuming scarce local resources.
The projects that succeed will be those that treat environmental, community, infrastructure, and economic considerations as part of the investment thesis from the beginning.
Conclusion: The AI Infrastructure Race Is Becoming Global
The first phase of the AI infrastructure boom has been dominated by enormous investments in established technology markets. The next phase is likely to become much more geographically diverse.
Emerging markets offer compelling advantages: growing digital demand, large populations, renewable energy resources, available land, expanding fiber connectivity, and governments motivated to attract technology investment. They also present challenges involving power reliability, financing, regulation, water, connectivity, currency exposure, and infrastructure maturity. That combination of opportunity and risk is precisely what makes these markets interesting.
The countries that succeed will not necessarily be those offering the cheapest land or electricity. They will be the markets capable of combining reliable power, scalable energy infrastructure, strong connectivity, predictable regulation, available capital, sustainable water strategies, and growing digital demand into one investable ecosystem.
For data center developers, that means the traditional site-selection map is getting much larger. For emerging economies, it represents an opportunity to participate directly in one of the largest infrastructure investment cycles of the next decade.
AI may have started its infrastructure revolution in the world's largest technology markets, but the next generation of computing capacity could increasingly be built where energy resources, digital demand, capital, and economic development intersect.
Written by Chris Kalowes, founder of WattThe?! — 15+ years in utility-scale battery energy storage (BESS), renewable energy, and AI infrastructure, across utilities, IPPs, EPCs, developers, and technology providers.
Source: International Finance Corporation (IFC), "Risks and Opportunities in Data Center and AI Investment in Emerging Markets," 2026; World Bank Group results reporting on IFC's Yondr Group data center financing in Malaysia.