Data center pipeline faces construction delays, cancellations to mount through 2027: Bernstein

Bernstein Research said Friday that the global data center construction pipeline faces mounting delays and cancellations through 2027 as power and supply-chain constraints slow the conversion of announced capacity into operational sites. The firm expects the pace of cancellations to accelerate into 2027 as developers reassess projects amid bottlenecks in grid connections, transformers and liquid-cooling infrastructure needed for AI servers. Bernstein estimates 35% to 40% of announced capacity globally is at risk of delay or cancellation. The analysis finds that power availability, not capital, is now the primary gating factor for new sites. In Northern Virginia, Frankfurt and London, utility interconnection queues now stretch three to four years, forcing operators to look at secondary markets and retrofits. Construction costs per megawatt have risen roughly 20% to 25% since 2023, driven by electrical equipment, steel and specialized labor. Lead times for high-voltage transformers and switchgear remain at 80 to 100 weeks, limiting how fast delayed projects can restart. Despite the delays, the long-term outlook stays constructive. Bernstein argues AI inference and training will keep driving demand and the backlog should clear post-2027 as new power comes online and cooling designs standardize. The firm sees a bifurcation for investors, with companies that have secured power and land gaining share while those dependent on future utility allocations face write-downs.