In the arid expanse east of Reno, Nevada, a technological gold rush is transforming the landscape. Construction crews are flattening foothills and laying the foundations for what some have dubbed a "data center city"—a cluster of massive facilities built by tech giants like Google, Microsoft, Apple, OpenAI, Switch, EdgeCore, Novva, Vantage, and PowerHouse. According to MIT Technology Review, this surge has turned the Tahoe Reno Industrial Center—a business park larger than Detroit—into the epicenter of America’s data infrastructure boom, fueled by the insatiable energy and computing demands of artificial intelligence (AI).
What’s driving this frenzied expansion? The answer, in large part, is AI. By 2026, AI is projected to account for 40% of global data center power demand, a figure that’s straining electrical grids and raising environmental alarms. The U.S. data center industry already consumes 4% of the nation’s electricity, and that number is expected to triple to 12% by 2028, according to AINVEST. As the race to develop and deploy advanced AI models intensifies, companies are pouring billions into building the infrastructure needed to support these digital behemoths.
The scale of construction in Nevada is staggering. Public filings from NV Energy, the state’s dominant utility, reveal that a dozen data-center projects—mostly in the Reno area—have requested nearly six gigawatts of electricity capacity over the next decade. To put that in perspective, that’s enough to require expanding Nevada’s entire power sector by about 40%, all for a single industry. The construction underway amounts to about 13 million square feet—nearly five Empire State Buildings laid out flat. But the full scale, energy needs, and water requirements of these developments are shrouded in secrecy, with most companies declining to provide details.
The data center boom isn’t just about real estate and electricity. It’s also about the companies and technologies powering the AI revolution. Palantir Technologies, for example, has emerged as a leading software player, recently reporting its first quarter with over $1 billion in revenue. Its U.S. commercial revenue alone grew by a staggering 93% year over year in Q2 2025, reaching $306 million. Palantir’s success is built on its ability to help organizations make sense of vast, disorganized data sets in real time. The company closed 157 deals valued at $1 million or more in the second quarter, with 42 deals topping $10 million. Its net income hit $327 million, representing a robust 33% net margin, according to The Motley Fool.
Meanwhile, Arm Holdings is positioning itself as a backbone of the data center market with its energy-efficient chip designs. Since its IPO in September 2023, Arm’s stock has surged 178%, though it has recently traded sideways. The company’s royalty revenue grew 25% year over year in the latest quarter, driven by demand for its Armv9 chip architecture. More than 70,000 businesses now use Arm’s Neoverse data center chips—a 40% increase from the previous year. These chips power everything from Nvidia’s Grace and Amazon Web Services’ Graviton to Google’s Axion and Microsoft Cobalt. Analysts project Arm’s earnings to grow 24% annually for the next several years, as the need for energy-efficient AI processing continues to mount.
But the AI infrastructure story isn’t just about headline-grabbing tech firms. There’s also a quieter, strategic play unfolding in the energy sector. Pampa Energía S.A., a debt-free and cash-rich company, is rapidly expanding its footprint in Argentina’s Vaca Muerta shale region, constructing a $3 billion pipeline to transport 550,000 barrels of oil per day. Pampa is also a key player in Argentina’s FLNG (Floating Liquefied Natural Gas) project, which will export 115 megawatts of geothermal power to Google and supply 100% renewable energy to Meta via Enbridge. With cash reserves equal to 30% of its market cap and net debt at a historic low of $410 million, Pampa is well-positioned to serve as a "toll booth" for the AI energy crisis, generating stable cash flows from every unit of LNG and nuclear power it delivers. The company’s 427-megawatt PEPE 6 wind farm further aligns it with the global shift toward green energy.
The urgency to invest in energy infrastructure is growing. The Trump administration has responded with a 28-page action plan to accelerate infrastructure development, fast-tracking grid connections, leveraging federal lands for data centers, and expanding nuclear energy. These policy moves have supercharged demand for engineering and construction firms, but companies like Pampa offer a more direct and undervalued route to capitalize on the AI energy boom. According to Mar Vista U.S. Quality Strategy analysts, Pampa could see returns of over 100% within 12 to 24 months, driven by surging AI energy demand, U.S. onshoring, and the ongoing energy transition.
Yet, as the digital future takes shape in Nevada’s high desert, concerns about sustainability and resource allocation are growing louder. The environmental impacts of the data center boom are not fully understood, largely because companies closely guard details about their operations. Water experts, environmental groups, and residents—including the Pyramid Lake Paiute Tribe—are sounding the alarm. The region’s main water source, the Truckee River, is already under strain from population growth and prolonged drought. Data centers consume vast amounts of water both directly, for cooling, and indirectly, through increased demand on local power plants. Some estimates suggest the newest data center projects could consume billions of gallons of water annually, exacerbating tensions over water rights and sustainability.
To mitigate these impacts, some companies are investing in water-efficient technologies. Google’s existing Storey County facility is air-cooled, withdrawing 1.9 million gallons in 2023 but consuming only 200,000 gallons. The rest is cycled back into the water system. Microsoft claims to be using chip-level cooling solutions that recirculate water without evaporation. EdgeCore’s new data center will rely on an air-cooled, closed-loop chiller. But critics point out that even air cooling can increase overall energy use, shifting the water burden to power plants elsewhere in the state.
The water issue is particularly fraught for the Pyramid Lake Paiute Tribe, whose reservation marks the end point of the Truckee River. The tribe has fought for decades to protect its water rights, which are vital for farming, cultural identity, and the survival of native fish species. Chairman Steven Wadsworth told MIT Technology Review, “We know what happens when water use goes unchecked. Because all we have to do is look over there and see a dry, barren lake bed that used to be full.” He worries that the relentless demand for data centers will force the tribe into new legal battles, continuing what he calls “a century of water wars.”
Despite these challenges, local officials remain bullish on the data center boom. The projects have created thousands of construction jobs and are expected to generate nearly half a billion dollars in tax revenue for Nevada, even with generous abatements. As Kathleen Taylor, vice mayor of Reno, put it during a recent city hall hearing, “Welcome to Reno. We’re open for business.”
As AI’s energy and infrastructure needs accelerate, the story unfolding in Nevada offers a glimpse into the future—a future where the digital and natural worlds collide, and the costs and benefits of technological progress are measured not just in dollars and megawatts, but in water, community, and the resilience of the land itself.
