Where Data Tells the Story
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In Q1 2025, U.S. businesses are increasingly shifting AI workloads from public cloud to colocation facilities to improve performance, control costs, and safeguard data privacy. A recent survey found 91% plan to run generative AI in colocation, followed by chatbots (81%), predictive analytics (79%), augmented AI (76%), and robotics (71%).
AI workloads demand high-density GPU clusters, advanced cooling, and reliable power capabilities that many legacy data centers lack. Tier III+ colocation providers are investing in liquid cooling, modular expansions, and direct fiber links to AWS, Azure, and GCP, enabling seamless hybrid operations without costly backhaul.
CoreSite reports rising migration: generative AI in colocation is set to grow from 42% in 2024 to 45% in 2025, recommendation systems from 36% to 47%, and augmented AI from 41% to 44%. Colocation offers predictable costs, lower data egress fees, and more infrastructure control than cloud alone, making it ideal for long-term AI workloads.
While the cloud remains vital for flexibility and cloud-native tools, colocation is becoming the foundation of AI infrastructure, balancing scalability, efficiency, and connectivity in a hybrid model.