Google is planning to spend $40 billion in Texas to develop data centers for artificial intelligence and support programs over the next two years, representing the search engine giant's largest investment in any U.S. state.
The Mountain View, California-based company made its announcement alongside federal, state and local leaders on Friday at its existing data center in Midlothian, Texas, roughly 25 miles southwest of downtown Dallas. With the new investment, Google plans to develop three data center campuses, one in Armstrong County in the Texas Panhandle and two other hubs in West Texas' Haskell County, a three-hour drive from downtown Fort Worth, by the end of 2027.
Google is also investing in the state's power grid, water resources, training programs and agriculture industry to partially offset any negative effects of its data center plans.
“The $40 billion investment we announced today will bring three new data center campuses to the state to power the new era of AI innovation," Google and Alphabet CEO Sundar Pichai said in a statement. "This investment will create thousands of jobs, provide skills training to college students and electrical apprentices and accelerate energy affordability initiatives throughout Texas.”
Google's additional investment in Texas comes amid fierce competition among tech giants and real estate investors seeking to acquire land, power and land to build the infrastructure needed for AI and machine learning. AI has significantly higher power and water requirements than traditional cloud computing.
Goldman Sachs projects that AI will drive a 165% increase in data center power demand by 2030, the company said in a recent forecast. The explosion of interest in AI has resulted in an "arms race" to develop the technology, the firm said.
Other tech giants, including Oracle and Meta, are investing billions of dollars to build AI data centers in West Texas, citing the state’s business climate, energy infrastructure and talent. Still, investors are increasingly expressing concerns over a possible AI bubble, with billions of dollars at risk.
Google is also continuing to invest in its existing Midlothian campus and its Dallas cloud region, one of Google's 42 cloud regions in the world meant to deliver high-performance, low-latency services to businesses and groups to build and scale their own AI applications, officials said. Google also said its first data center building at its Red Oak campus in Ellis County is now operational. Red Oak is a city about 20 miles south of downtown Dallas.
"Google's $40 billion investment makes Texas Google's largest investment in any state in the country and supports energy efficiency and workforce development in our state," Texas Gov. Greg Abbott said in the statement. "We must ensure that America remains at the forefront of the AI revolution, and Texas is the place where that can happen.”
The U.S. federal government has been backing data center development as a way to ensure national security, economic prosperity and a way to advance scientific breakthroughs. Google's investments in U.S. infrastructure will help the nation "lead the world in AI," officials said.
Google did not immediately respond to an emailed request from CoStar News seeking information on any possible economic incentives tied to the $40 billion investment.
Strengthening capacity
As part of its investment, Google expects to strengthen energy capacity and use air-cooling technology to limit water usage at the new data center campuses. Google is committed to "growing its infrastructure by bringing new energy resources onto the grid," officials said.
One of the new Haskell County data centers will be built directly alongside a new solar and battery energy storage plant, creating the first industrial park to be developed through Google's partnership with Intersect and TPG Rise Climate. The approach of co-locating energy supply with data center load is a "crucial strategy to reduce the need for new infrastructure" and ease demands on the Texas power grid, officials said.
To date, Google has contracted to add more than 6,200 megawatts of net new energy generation and capacity to the Texas electricity grid through power-purchase agreements with energy developers, including AES Corp., Enel North America, Intersect Clearway, Engie, SB Energy, Ørsted and X-Elio, the statement said.
Google also announced a $30 million Energy Impact Fund meant to scale and accelerate energy initiatives throughout Texas over the next three years, beginning in 2026. The fund will aid community partners and local organizations with a focus on energy affordability, home- and public-school weatherization and energy efficiency and energy workforce development.
Upon completion, Google's three new facilities in Armstrong and Haskell counties are expected to use advanced air-cooling technology, limiting water use to site operations like kitchens. Google plans to contribute $2.6 million to Texas Water Trade, an Austin-based nonprofit group, to create and enhance up to 1,000 acres of wetlands along the Trinity-San Jacinto Estuary along the northeastern Texas coast, as well as deliver about 300 million gallons of freshwater annually in the southeastern part of the state.
In addition, Google is providing more than $2 million to support the state's agriculture industry, including a regenerative agriculture program with Boston-based Indigo Ag on a project in the Dallas-Fort Worth region and an irrigation efficiency project with Israel-based N-Drip on a project in the Texas Panhandle.
Google's future data center in Armstrong County in the Texas Panhandle is expected to bring high-tech jobs and long-term financial stability to the area, "ensuring that the legacy of this land will now include powering the future of innovation alongside our farming and ranching heritage," Armstrong County Judge Adam Ensey said in the statement.
Adding jobs
The new data center projects are expected to create a significant demand for electrical jobs.
Electrical Training Alliance, with funding from Google.org's AI Opportunity Fund, will boost the number of apprentices in Texas, as well as integrate AI tools into its training curriculum. Google said it expects this initiative to train existing electrical workers and more than 1,700 apprentices in the state by 2030.
In all, Google said it is also committing $7 million in grants to support AI-related initiatives in healthcare, energy and education across the state, including enhanced access to healthcare in rural areas, helping the University of Texas at Austin and Texas Tech University to address critical energy challenges and expanding AI training with support from Houston City College.
This funding is in addition to the search engine giant's ongoing work with institutions such as the University of Texas, Texas A&M and Texas State University systems, along with Dallas College and South Texas College. These schools were among the first cohort of Google AI for Education Accelerator, offering students, faculty and staff no-cost access to Google certificates and AI training courses.
Google's announcement to build a data center campus in Armstrong County in the Texas Panhandle represents "a generational opportunity that puts the ... region directly in the forefront of the global digital economy,” said Ensey, the county's judge, in the statement.