Google bets big on Texas with $40B data center plan

Alphabet Inc.’s Google is set to invest $40 billion in three new data centers in Texas, expanding its presence as competitors like OpenAI and Anthropic PBC also make significant investments in the state. 

According to a statement from Google on Friday, November 14, this investment is expected to continue through 2027. One of the data centers will be located in Armstrong County, which is in the Texas Panhandle, while two others will be situated in Haskell County, near Abilene. Moreover, one of the facilities in Haskell will work in conjunction with a new solar and battery energy storage plant to help alleviate strain on the power grid. 

“This investment will create thousands of jobs, offer skills training for college students and electrical apprentices, and speed up energy affordability projects across Texas,” said Sundar Pichai, CEO of Alphabet, during an event near Dallas where Google already operates two other data centers. 

Google eyes Texas for expansion with substantial investments in the state 

Texas has become a prime location for data centers because companies are drawn to its lower energy costs, extensive available land areas, and a state government that supports infrastructure for the growing artificial intelligence sector. 

In sharing its plans, Google highlighted its dedication to adding new energy resources to the grid, covering operational costs, and backing community energy efficiency programs.

Additionally, the company announced that an electrical training program would increase the number of apprentices in Texas with support from Google.org’s AI Opportunity Fund. 

During an event with Pichai, Texas Governor Greg Abbott commented on the topic of discussion. Abbott predicted that Texas would become the main hub for Google’s AI data centers. He argued that companies can come to Texas and carry out their operations knowing that the state acts quickly in business.

Meanwhile, after-hours trading, Alphabet’s stock increased by 1.7%, following a closing price of $276.41 in New York. It is worth noting that Texas is also attracting commitments from other businesses. 

Texas positions itself as a hub for tech investment 

Texas has solidified its position as a hub for tech-related investments. To support this claim, sources noted that Anthropic announced plans to invest $50 billion in data centers across the US, including locations in New York and Texas, which offer ample land and lower energy costs, earlier this week.

The facilities, which are part of the company’s broader effort to remain competitive in the AI infrastructure market, are being developed in collaboration with Fluidstack.

The firm is targeting its enterprise clients, the ones responsible for most of its revenue, and these new sites are built to match the size of that demand.

Moreover, the first data center being developed by the Stargate project, supported by OpenAI (the creator of ChatGPT), Oracle Corporation, and SoftBank Group Corporation, is located in Abilene, Texas. Company leaders have indicated that they will establish more facilities in the state. 

On the other hand, Meta Platforms Inc. is constructing a new data center in Texas, capable of generating a gigawatt of power. To put it into perspective, a gigawatt can simultaneously supply power to 750,000 people. Additionally, Microsoft Corp. signed a nearly $10 billion agreement earlier this month for five years of computing capacity in Texas. 

Fermi Inc., a real estate investment trust co-founded by Rick Perry, the former governor of Texas and energy secretary under President Donald Trump, also revealed plans to construct four nuclear power reactors in the state for a private data center campus. 

As for Google’s plan, analysts noted that the tech giant typically makes significant spending promises, and this year, an investment of more than $90 billion in capital expenses is expected. The figure is much greater than originally thought, with the majority of the money coming from servers, customized chips, and new data centers to support its AI and cloud services.

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