How do data centers make money?

Model 1: Renting out space and power

The simplest model is real estate. A colocation data center is owned and run by a company that rents space, equipment or services to other organizations, as the Congressional Research Service describes it[4]. Tenants bring their own servers; the landlord supplies the building, the electricity, the cooling, the security and the network connections. Digital Realty, which describes its business as data center, colocation and interconnection services[5], reported $1.9 billion in revenue in the second quarter of 2026, up 29% from a year earlier[5]. Equinix, which frames its business around a data center footprint and interconnected ecosystems[6], reported $2.625 billion, up 16%, helped in part by one-time xScale fees[6].

Deals are priced by power, not floor space. Space is marketed by the kilowatt or megawatt a tenant can draw, and leases are reported as the yearly rent they will bring in: Digital Realty says leases signed in that one quarter are expected to generate $307 million a year in base rent[5]. Prices are rising. CBRE reports that average asking rates in the main markets climbed 4.3% in the first half of 2026 for requirements of 250 to 500 kilowatts, and 6.7% for deployments of 10 megawatts or more[2].

Model 2: Selling computing by the hour

Cloud providers run data centers for their own services and sell what runs inside them: computing, storage and software, rented by the hour or by the month. CRS describes cloud data centers as networks of facilities that let many users remotely use chips, software, storage and networks[4].

The sums involved are enormous. Amazon says AWS sales grew 37% from a year earlier to $42.2 billion in the second quarter of 2026[1], and that AWS operating income reached $16.6 billion, up from $10.2 billion[1]. Microsoft says Azure and its other cloud services grew 43% in its most recent quarter, and that Azure revenue topped $100 billion in a fiscal year for the first time[7].

Those returns help pay for the building boom. Amazon expects about $220 billion in capital spending in 2026[8] and Alphabet $195 billion to $205 billion[9]; Alphabet says about 60% of its recent technical infrastructure spending went to servers and 40% to data centers and networking equipment[9].

Model 3: Renting out AI chips

A newer group of companies, sometimes called neoclouds, specializes in renting out large clusters of GPUs to companies that train and run AI models. CoreWeave, for one, calls itself The Essential Cloud for AI[3]. Because customers commit to capacity in advance, the business is watched through its backlog: revenue already under contract but not yet earned. CoreWeave put its backlog at about $104 billion as of June 30, 2026[3].

The projects where CoreWeave is named as developer or tenant are on its company page, and what is an AI data center? explains what goes into them.

Model 4: Developing the site

Some companies make their money before a single server arrives. Developers buy land, secure a power supply and zoning, then build and lease the finished campus, sometimes to a single large tenant, or sell the powered land outright. Land that already has power has become the prized ingredient: powered land in primary U.S. markets averaged $584,000 per megawatt in 2026, up 51% from a year earlier[10], against all-in construction costs of about $17.6 million per megawatt before chips[10].

Most of what is being built is spoken for before it opens. CBRE says tenants had already committed to 80.4% of all capacity under construction in North America in the first half of 2026, up from 74.3% a year earlier[2], while vacancy in the primary markets fell to 1.4%[2]. The company ranking lists the developers behind tracked projects.

Data centers that make no money directly

Not every data center is a business. An enterprise data center is built, owned and run by a company to house its own IT systems[4], the way a bank or a hospital system might. It earns nothing on its own; it is a cost of running the rest of the company. Campuses that serve only one company’s own products, such as a social network’s, work the same way at far larger scale: the money comes from the products, not the building.

What the town gets

For the county or town, the money arrives mainly as property tax on the buildings and equipment, often reduced by incentive agreements, plus some one-time fees. Virginia’s legislative auditors found the state’s sales tax exemption saved data centers $928 million in fiscal 2023[11]. The tax incentives tracker lists the abatements and PILOT agreements attached to tracked projects, and data center pros and cons weighs the revenue against the costs.

Common questions

How do data centers make money?

By selling what is inside them. Colocation and wholesale landlords lease space, power and network connections; cloud providers rent out computing by the hour or month; AI clouds rent GPU capacity that customers commit to in advance; and developers build and lease or sell whole campuses. Company-owned enterprise data centers make no money directly.

Are data centers profitable?

The largest operators report strong results. Amazon Web Services reported $16.6 billion of operating income on $42.2 billion of sales in the second quarter of 2026. CBRE says vacancy in primary North American markets was a record-low 1.4% in the first half of 2026 while asking rates rose. Results depend on filling the capacity that gets built.

How do data centers charge customers?

Colocation space is usually priced by the power a customer can draw, in kilowatts or megawatts. Cloud and AI providers charge for computing time or reserved capacity instead. CBRE reported asking rates up 4.3% to 6.7% in the first half of 2026, depending on the size of the requirement.

Who owns data centers?

Three main groups: colocation and wholesale landlords such as Equinix and Digital Realty; cloud and internet companies such as Amazon, Microsoft, Google and Meta, which own many of their own campuses; and developers and investors that build campuses to lease. Individual companies also run enterprise data centers for their own use.

Sources

1. Amazon.com Announces Second Quarter Results
   Amazon.com, Inc. · 2026-07-30
   2 source excerpts

   “AWS segment sales increased 37% year-over-year to $42.2 billion.”

   “AWS segment operating income was $16.6 billion, compared with $10.2 billion in second quarter 2025.”

2. North America Data Center Trends H1 2026
   CBRE · 2026-08-27
   3 source excerpts

   “primary market vacancy fell to a record low of 1.4% in H1 from 1.6% in H1 2025”

   “Preleasing activity accelerated with commitments made on 80.4% of all under-construction capacity, compared with 74.3% a year ago”

   “Average asking rates for 250-to-500-kW requirements across primary markets rose by 4.3% in H1 … Asking rates for 10-plus-MW deployments across primary markets rose by 6.7% in H1”

3. CoreWeave Reports Strong Second Quarter 2026 Results
   CoreWeave, Inc. (SEC filing) · 2026-08-11
   2 source excerpts

   “Revenue backlog was approximately $104 billion as of June 30, 2026.”

   “CoreWeave is The Essential Cloud for AI™.”

4. Data Centers and Their Energy Consumption: Frequently Asked Questions (R48646)
   Congressional Research Service (via EveryCRSReport.com) · 2026-05-12
   3 source excerpts

   “Other organizations, especially those lacking the space, staff, or IT resources, often choose to rent a space, equipment, or services within a colocation data center (also known as a "managed data center") owned and operated by a third-party company.”

   “Some online service providers operate geographically distributed and interconnected data centers and allow multiple users to remotely access computing resources such as data processing chips, software, data storage, networks, and applications hosted by these data centers, which are called "cloud data centers."”

   “For example, a large company may choose to build, own, and operate an on-premises data center (also known as an "enterprise data center") to house and manage its own IT infrastructure.”

5. Digital Realty Reports Second Quarter 2026 Results
   Digital Realty Trust, Inc. · 2026-07-23
   3 source excerpts

   “Digital Realty reported total revenues of $1.9 billion in the second quarter of 2026, an 18% increase from the previous quarter and a 29% increase from the same quarter last year.”

   “Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation and interconnection solutions.”

   “Signed total bookings during 2Q26 that are expected to generate $307 million of annualized GAAP base rent at 100% share”

6. Equinix Reports Second-Quarter Results, Raises 2026 Guidance and Long-Term Outlook
   Equinix, Inc. · 2026-07-29
   2 source excerpts

   “Its digital infrastructure, data center footprint and interconnected ecosystems empower innovations that enhance our work, life and planet.”

   “Revenues $2.625 billion, a 16% increase over the same quarter of the previous year on both an as-reported basis and a normalized and constant currency basis driven by strong underlying performance and one-time xScale® fees”

7. Microsoft Cloud and AI strength fuels fourth quarter results
   Microsoft Corporation · 2026-07-29
   Source excerpt

   “Azure and other cloud services revenue increased 43% … This year, Azure revenue surpassed $100 billion for the first time”

8. Andy Jassy said Amazon will spend $220 billion this year—and still won't have enough capacity to meet demand
   Fortune · 2026-07-30
   Source excerpt

   “During the call, Jassy told investors that Amazon now expects to devote $220 billion to capital expenditures in 2026, up from its prior estimate of $200 billion, owing to higher memory costs.”

9. Earnings call transcript: Alphabet beats Q2 2026 estimates, shares fall on capex surge
   Investing.com · 2026-07-22
   2 source excerpts

   “We are updating our full-year 2026 CapEx guidance range to $195 billion-$205 billion, up from our previous estimate of $180 billion-$190 billion.”

   “CapEx was $44.9 billion in the second quarter, with the vast majority of this spent in technical infrastructure to support our investments in AI. Approximately 60% of our investment in technical infrastructure this quarter was in servers, and 40% was in data centers and networking equipment.”

10. Cushman & Wakefield Releases 2026 Data Center Development Cost Guide, Citing 21% Rise in Per-MW Construction Costs
    Cushman & Wakefield (company press release) · 2026-09-03
    2 source excerpts

    “markets achieving average values of $584,000 per MW in 2026 year-to-date—35% above its five-year average and 51% higher year-over-year.”

    “All-in greenfield development costs in the United States and Canada average $17.6M per megawatt for the most modern facilities, excluding chips and GPUs.”

11. Data Centers in Virginia (Report 598, Summary)
    Joint Legislative Audit and Review Commission, Commonwealth of Virginia · 2024
    Source excerpt

    “Because data centers are capital intensive, the exemption is valuable to the industry (providing $928 million in tax savings in FY23), and about 90 percent of the industry uses the exemption. ... most of the other states that Virginia competes with for new data center developments have similar exemptions.”

Each source was opened and checked against the excerpt shown. Company statements are identified as such. Figures are as published; where sources differ, each is shown.