AI-Fueled Data Centers Siphon Billions from Infrastructure Funding

State and local governments sold a record amount of debt for the second year in a row in 2025, with strategists predicting another $600 billion in sales next year. Most of that money is expected to fund infrastructure projects such as improvements to roads, bridges, and other critical infrastructure. However, a surge in private spending on data center construction may divert resources away from these projects, exacerbating existing labor shortages and potentially slowing down infrastructure development. According to Bloomberg, private spending on data center construction was running at an annualized rate of over $41 billion, roughly the same as state and local government spending on transportation construction. This trend has raised concerns among industry experts, who warn that data center construction could suck resources away from other projects. Andrew Anagnost, CEO of architecture and design software maker Autodesk, told Bloomberg that there is "absolutely no doubt" that data center construction will divert resources from other projects. "I guarantee you a lot of those infrastructure projects are not going to move as fast as people want," he said. The data center boom is driven by the growing demand for cloud computing and artificial intelligence (AI) services, which require massive amounts of data storage and processing power. As a result, companies are investing heavily in building new data centers to meet this demand. However, this surge in construction activity is putting pressure on the construction industry, which is already facing labor shortages due to retirements and President Donald Trump's immigration crackdown. The Census Bureau data highlights the growing competition for construction workers and resources between data center construction and infrastructure projects. This competition may have significant implications for society, particularly in areas where infrastructure development is critical to economic growth and public safety. For instance, delayed infrastructure projects can lead to increased congestion, accidents, and environmental hazards. Industry experts warn that the data center boom may have far-reaching consequences for the construction industry and the broader economy. "The construction industry is already facing significant challenges, including labor shortages and supply chain disruptions," said a spokesperson for the Associated General Contractors of America. "The surge in data center construction will only exacerbate these challenges and may lead to delays and cost overruns in other projects." The current status of data center construction and its impact on infrastructure projects is a developing story. As the demand for cloud computing and AI services continues to grow, it is likely that data center construction will remain a major driver of construction activity. However, the competition for resources and labor between data center construction and infrastructure projects will likely continue to be a major challenge for the construction industry and policymakers.