An overview of the digital infrastructure sector
According to IBM, 90% of the world’s data was created in the past two years. To facilitate this exponential growth, a global network of interconnected physical assets enable the flow, processing, and storage of data, which is collectively referred to as the digital infrastructure sector.
The key subsectors include:
Together, these subsectors form a resilient and scalable foundation for the digital economy and represent the key segments of the investable universe.
Institutional investor interest in digital infrastructure started gaining momentum in the early 2010’s, initially focused on cell towers and data centers due to their stable cash flows and utility-like characteristics. As the digital transformation accelerated—driven by cloud computing, AI, and 5G—investors expanded into fiber networks, edge computing, and subsea cables, recognizing their long-term growth potential and essential role in the digital economy.
Over the past decade, capital deployment has shifted from passive ownership to active platform creation, with pension funds, sovereign wealth funds, and infrastructure managers backing large-scale buildouts, carve-outs, and greenfield projects across global markets. The opportunity is vast as cumulative infrastructure spend is expected to reach $106 trillion by 2040, with the digital sector representing nearly a fifth of that total[1]. Over the near term, the digital segment is set to remain in favor among allocators as shown in Figure 1.
It is predicted that the total volume of data produced, recorded, transferred, and used worldwide will reach 394 zettabytes in 2028, up from 149 zettabytes in 2024[2]. Demand within digital infrastructure subsectors is primarily driven by the exponential growth of data from cloud computing, 5G, internet of things (IoT), digital services, and most notably, AI. Each demand driver requires scalable, low-latency, and high-bandwidth connectivity. Enterprises, governments, and consumers increasingly rely on data centers, fiber networks, and wireless infrastructure to support digital transformation, remote work, and smart technologies (see Figure 2).
On the supply side, infrastructure deployment is shaped by capital availability, regulatory frameworks, and access to land, power, skilled labor and semi-conductor chips. While hyperscalers (e.g., AWS, Alphabet, Microsoft, Meta, Oracle) and telecoms lead investment in core assets, institutional investors are increasingly funding greenfield builds, platform expansions, and open-access models to meet rising demand and capture long-term returns.
The scale of the increases in both demand and supply in recent years makes the return outlook somewhat uncertain. The fragility around both demand and supply is illustrated by the somewhat circular investments and contracts made by numerous companies in the technology and AI supply chain.
Indirect ways of accessing the data center theme include investments in power or electricity grids. This is because of the significant energy demands created by data centers for continuous power.
Total capacity grows from 82 GW in 2025 (44 GW AI workload, 38 GW non-AI) to 219 GW in 2030 (156 GW AI, 64 GW non-AI), representing a 3.5× increase. Incremental AI capacity added per year rises from 13 GW in 2025 to 31 GW in 2030, totaling 124 GW over the period. Both AI and non-AI workloads are key drivers of demand growth, with AI contributing the largest share of capacity expansion.
Source: McKinsey & Company
Digital infrastructure can potentially check multiple boxes for an investors’ objectives – income, diversification, return enhancement, and inflation mitigation. For example, a “powered shell” data center investment (i.e., landlord owns building + power + fiber with tenant responsible for costly servers + internal buildout) includes a long-term lease (e.g., 10-year) with annual rent escalators and an investment-grade tenant. Likewise, cell towers’ revenue models are 5-10-year contracts with wireless carriers and annual revenue escalators of c. 3-4%. Contrast these income-producing types of investments with a data center development project, where targets returns will be substantially higher and predominantly composed of capital appreciation, given relative risk undertaken will be much greater.
The outlook across digital infrastructure subsectors remains strong, driven by sustained data growth and technological innovation.
Overall, the sector is expected to remain a high-priority investment area for institutional capital seeking long-term, resilient returns. However, the growing uncertainty around the circular nature of investments and contracts in the data center supply chain make investment manager and strategy selection critical. Further, indirect ways of accessing the data center theme around power could provide more resilient returns. We believe that investors need to carefully pick their spots in the data center space.
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