Private equity giant Apollo Global Management is acquiring a majority stake in data center builder Stream Data Centers, a move to pour billions into the physical infrastructure required to power the AI boom.

• The grid gets squeezed: The acquisition comes as the industry scrambles to keep up with demand that is pushing power grids to their limits. In the heart of Silicon Valley, San Jose recently inked a deal with PG&E to secure power for its data centers, which have collectively requested over 2,000 megawatts of capacity, forcing the utility to plan major grid upgrades just for a single new Microsoft facility.
• The race to build: With capital flooding the market, construction is accelerating. This week alone, data center operator CoreSite launched SV9, a new 230,000-square-foot facility in Santa Clara, the latest addition to a campus that now spans nearly 1.5 million square feet.
• Building smarter, not bigger: But physical constraints are forcing the industry to innovate beyond just building more. Chipmaker Broadcom recently unveiled new hardware for linking disparate data centers into a single virtual system, while other projects are being designed for off-grid operation with on-site power generation.

The data center gold rush isn't just about capital. The real challenge is a physical one, forcing the industry to fundamentally rethink everything from chip design to power generation to keep the AI boom online.

• Also on our radar: The industry's search for power and efficiency is sparking new ideas across the board. Some see the long-term solution as nuclear-powered small modular reactors, while the financial world is turning data center rent into complex asset-backed securities. In a meta twist, AI itself is now being used to design the next generation of data centers.