Barclays: Dual restrictions of physical and capital, data center growth will slow significantly in 2027!

The global data center construction boom is now facing dual constraints of physical bottlenecks and financing pressures, signaling that a growth inflection point may be near.

According to Wind Trading Desk, a new research report from Barclays indicates that the year-on-year growth rate of new global (excluding China) data center capacity will sharply decline from over 100% in 2026 to about 35% in 2027, with 2028 likely seeing a stabilization. Hyperscalers will dominate this construction cycle, with global new operational capacity in 2027 estimated to reach around 25GW, and hyperscalers accounting for more than 60% of that.

Barclays also warns that rising debt costs and a tightening financing environment are putting additional pressure on data center developers, as evidenced by CoreWeave’s ongoing funding discussions. In terms of sector allocation, Barclays recommends that investors prioritize semiconductors, low-voltage electricals, and cooling equipment within data center-related capital goods, while remaining relatively cautious on power equipment and medium-voltage electricals.

Hyperscalers Take the Lead, Non-hyperscalers Show Lower Conversion Rates

Barclays makes it clear in the report that hyperscalers will continue to lead the actual advancement of the data center construction pipeline. The report forecasts that global (excluding China) new operational capacity in 2027 will total approximately 25GW, with hyperscalers contributing over 60%.

By contrast, the situation for non-hyperscale developers is much tougher. Barclays, conservatively modeling, assumes that the actual conversion rate of non-hyperscale project pipelines is only about 40%, on the grounds that these developers are facing multiple physical bottlenecks, including land, power access, and supply chain constraints.

This structural divergence means that large nominal project reserves do not necessarily translate into real deliverable construction volume, suggesting that investors should remain cautious regarding the project pipelines of non-hyperscale developers.

Financing Pressures Intensify, CoreWeave as a Symbolic Case

Beyond physical bottlenecks, shifts in the financing environment are becoming another key risk variable. Barclays points out that rising debt costs and market concerns over financing sustainability will further suppress the project delivery capacity of developers.

The report specifically mentions CoreWeave, regarding its ongoing investor funding discussions as a direct reflection of sector financing pressures. Notably, CoreWeave plans to add 5GW in data center capacity by 2030—a scale that holds significant weight in Barclays’s global data center construction projections, thus making its financing progress a closely watched market indicator.

Barclays believes that uncertainties in financing, combined with physical bottlenecks, together form the core logic behind the post-2027 growth slowdown.

Growth Curve: 2026 Peaks, 2028 Levels Off

Barclays’ forecast curve shows that the trajectory of global new data center capacity features an initial sharp rise, a subsequent pullback, and then stabilization. 2026 will be the peak year for growth, with a year-on-year increase of over 100%; 2027 sees the growth rate narrowing to about 35%; and by 2028, new capacity may essentially plateau, no longer continuing the previous surge.

Barclays believes this slowdown is not due to vanishing demand but is an inevitable outcome of both physical and capital constraints. Hyperscalers, thanks to stronger balance sheets and more mature supply chain management, will further solidify their dominant position this cycle, while smaller developers face higher project suspension risks. For investors, identifying which suppliers are deeply tied to hyperscalers will be key to navigating this phase of structural divergence.

Barclays suggests overweighting semiconductors, low-voltage electrical equipment, and cooling equipment, while remaining relatively cautious on power equipment and medium-voltage electrical devices. In the semiconductor sub-sector, Barclays acknowledges that Neocloud’s financing concerns are pressuring market sentiment, compounded by ongoing debates around AI investment returns since the summer. However, the report also emphasizes that GW capacity risks are not directly equivalent to GPU demand risks; this is due to current supply still being relatively tight, with hyperscalers remaining the core demand driver. Barclays believes that potential computing power demand is underestimated by the market, and the accelerated growth of cloud services is likely to alleviate concerns over investment returns.