LocationsData centers, a key component of digital economies, are gaining prominence as demand surges for cloud computing, artificial intelligence (AI), and 5G networks. These physical facilities are where organizations store, manage, and process large volumes of digital data, ensuring secure and efficient access. They house servers and networking infrastructure, supporting essential services like website hosting, email, media streaming, and financial transactions. In essence, data centers are where digital data lives.
Their role has become even more crucial with the explosive growth of AI, which relies on data centers to train and run complex models. As a result, global demand for data centers is projected to grow between 19% and 22% every year through 2030, an opportunity that does not come without costs. This #GraphForThought uses data from the Data Center Map -a database tracking data center locations worldwide- to explore how Latin America and the Caribbean (LAC) is responding to this trend, which countries are emerging as regional data hubs, and what are the development risks and opportunities associated with it.
Currently, nearly 10,000 data centers operate across 164 countries. However, they remain heavily concentrated in a few areas, primarily the most industrialized economies (Figure 1). Additionally, not all data centers are created equally. LAC accounts for 4.8% of the global infrastructure, a modest share compared to the United States, which dominates with 38.5%, and the G7 countries, which collectively hold 17.7%. While China holds only 3.7% of data centers, its computational capacity is second only to the United States. Together, these two countries house about one-third of the world’s ‘hyperscalers’ -massive data centers that support leading tech companies in AI development, data processing, and large-scale analytics. In contrast, LAC hosts around 0,4% of this high-powered infrastructure.
Within LAC, digital infrastructure is concentrated in just a handful of countries (Figure 2) and are mostly privately owned and backed by US investment groups. Brazil alone hosts 37.2% of the region’s data centers and the only 2 hyperscalers in LAC, followed by Chile (13.4%), Mexico (12.3%), Colombia (8.4%), and Argentina (6.8%). Together, they possess over 78% of the region’s data centers, giving them a strategic edge in AI adoption and digital innovation. In contrast, Peru and Panama each account for just 3.1% of the region’s data centers.
The remaining South American and Central American countries account for 8.1% and 5.5%, respectively. The Caribbean represents just 2% of the total, emphasizing the stark divide in access to data storage, cloud computing, and AI capabilities across LAC. Countries with little computational capacity rely on data storage and processing in other locations, subject to data privacy and regulations in those locations.
LAC's data center market is expected to double in value, rising from $5–6 billion in 2023 to as much as $10 billion by 2029, with hyperscalers expected to go up to 15 by 2032. In 2024 alone, investment in new data centers exceeded $2 billion. As most of this capital comes from abroad, foreign companies and investors continue to shape LAC’s digital infrastructure and cloud ecosystem.
The expansion of the sector faces significant infrastructure and environmental challenges. Data centers require great amounts of electricity and water, placing pressure on national grids and local resources. On average, they consume 10 to 50 times more electricity than standard commercial buildings. And even a relatively small center can use up to 25.5 million liters of water per year (the equivalent of water usage of roughly 300,000 people per year) just to maintain optimal cooling. To mitigate these challenges, governments and investors are increasingly prioritizing renewable energy integration and sustainable cooling technologies. Leading tech companies operating in Chile have committed to supplying 100% of their data center operations with renewable energy by 2025, and Brazil is making significant investments in wind and solar power to meet future demand. While these initiatives signal progress, long-term sustainability requires further planning, regulatory coordination, infrastructure investments, and innovations in energy efficiency.
New breakthroughs in AI technology mark a shift with potential implications for Latin America and the Caribbean. The region’s expanding data center market presents a critical opportunity to accelerate AI adoption, enhance computational capacity, and build an autonomous digital ecosystem to advance an inclusive digital transformation. Developing local infrastructure is a critical step in fostering AI innovation and supporting tech startups that rely on greater data storage and processing capabilities, that must be guided by principles of digital inclusion. Deploying AI without data centers and a clear set of principles is like running a marathon without proper shoes, you may eventually reach the finish line, but at a slower pace and with far greater strain than those with the right gear.
As public records become digital, sensitive information like social security and tax records need strong regulations for privacy. Hosting data locally can ensure compliance with national laws and maintain security. Governance and rule of law are crucial for LAC to attract investments needed for data centers, which require a stable regulatory environment. Property rights, data protection, and contractual obligations must be upheld. The EU and LAC Global Gateway Investment Agenda stresses that legal certainty and good governance boost tech investor confidence, affecting decisions on digital infrastructure location and operation as opportunities to accelerate sustainable development in the region.
If regional policymakers, investors, and research institutions align their strategies, data centers could become the backbone of homegrown AI innovation, and further drive digitalization in the region. New open-source models, less demanding in computational power and energy, could offer a chance for LAC to bypass traditional barriers, advancing technology while minimizing environmental impacts. Regional and sub-regional cooperation, and strategic joint investments, are also important to maximize opportunities for the region and build comparative advantages in a competitive global landscape. A major step in this direction is the development of the first open and inclusive large language model (LLM) fully built in LAC, Latam GPT. Trained with regional data through the collaboration of 27 institutions and over 60 experts, it captures the region’s linguistic, cultural, and regulatory context.
Therefore, the question is no longer whether LAC will experience an AI and data center boom, but whether it will leverage this infrastructure surge in a coordinated manner to foster self-sustaining innovation or remain a supplier of natural resources and a consumer in the unfolding digital revolution, just one cloud away from becoming a key player.
