Europe’s data centre industry is entering a period of unprecedented growth, with expected investment in the sector more than doubling in just a year — from about €80 billion to over €170 billion.

According to the latest State of European Data Centers report from the European Data Centre Association (EUDCA), as much as €176 billion is expected to flow into European data centre infrastructure between 2026 and 2031.

The surge reflects the continent’s rapidly growing demand for cloud computing, artificial intelligence infrastructure and digital services.

Yet despite the scale of the investment, a key question remains: who will ultimately control Europe’s digital backbone?

American hyperscalers still dominate

For years, Europe has struggled to build cloud infrastructure capable of rivaling major American providers such as Amazon Web Services, Microsoft, Google and Oracle.

Those companies continue to expand aggressively across the continent, constructing massive data centres to support cloud computing and AI workloads.

According to EUDCA Secretary General Michael Winterson, the majority of the projected €176 billion investment will still come from U.S. companies.

“That is by far the largest share,” Winterson said during a discussion at the European technology conference Kickstart Europe.

The dominance of American capital highlights a persistent challenge for European policymakers seeking greater “digital sovereignty” — the ability to control the technology infrastructure that underpins the region’s economy.

Europe’s push for technological independence

The rapid expansion of artificial intelligence has intensified pressure on Europe to build more domestic computing capacity.

Henna Virkkunen, Executive Vice-President for Tech Sovereignty at the European Commission, has said the European Union should triple its data centre capacity within five to seven years to support AI development and future digital industries.

Some signs of change are emerging. European infrastructure companies, including nLighten, are beginning to attract more regional investment as governments and investors look to reduce reliance on foreign providers.

However, Europe still faces structural obstacles. A competitiveness review led by former Mario Draghi found that fragmented digital markets, limited venture capital and uneven energy policies have long discouraged large-scale technology investment.

New data centre hubs emerging

Another major shift is geographic.

Europe’s traditional data centre hubs — often referred to as FLAP-D — include Frankfurt, London, Amsterdam, Paris and Dublin. These cities have dominated the sector for years but are now facing energy constraints and regulatory limits on further expansion.

As a result, developers are beginning to look elsewhere.

Cities such as Genoa and Bordeaux are exploring long-term infrastructure plans, while Portugal is attracting attention thanks to abundant renewable energy and new subsea cable connections linking Europe to global internet routes.

Winterson expects Europe could develop around a dozen major data centre hubs within five years, spreading infrastructure more evenly across the continent.

Energy challenges remain

The expansion raises another critical issue: power.

Data centres consume enormous amounts of electricity, and rapid growth in AI computing is only increasing demand. Countries such as Portugal are positioning themselves as attractive locations thanks to large supplies of wind and solar power.

But renewable energy alone may not be enough to ensure grid stability.

Winterson argues that nuclear energy — including next-generation small modular reactors — could play a crucial role in providing consistent baseline power for future data centre clusters.

Sovereignty vs global investment

Despite the political focus on digital sovereignty, Winterson cautions against framing the debate as a simple contest between Europe and the United States.

In many cases, he argues, the origin of investment matters less than how data and systems are governed.

The European Commission’s Cloud Sovereignty Framework defines multiple levels of digital control, from basic compliance with EU law to full technological autonomy. Most organisations, Winterson suggests, will operate somewhere in between.

“Once you assess what sovereignty actually means for your systems,” he said, “you realise not everything needs the highest level.”

The infrastructure of the AI economy

For now, the scale of investment suggests that Europe is becoming one of the most important global markets for digital infrastructure.

Over the past two decades alone, Amazon says it has invested more than $230 billion in Europe, including billions in new sovereign cloud projects designed to meet regulatory requirements.

The next phase of Europe’s data centre boom may ultimately determine whether the continent becomes merely a host for global tech infrastructure — or develops a competitive digital ecosystem of its own.

Either way, the stakes are rising.

In the age of artificial intelligence, data centres are no longer just server buildings — they are the power stations of the digital economy.