KKR, Carlyle to Build $4B Data Centers for US Army AI Push

Army Taps Private Equity for $4B Data Center Buildout

The U.S. Army has selected private equity firms KKR and Carlyle Group to build and operate two large-scale data centers, with each project estimated to cost $2 billion. This $4 billion initiative addresses a critical need for computing power as the military’s use of artificial intelligence skyrockets. According to Army officials, data processed on its AI platforms has surged eight-fold in recent weeks, a demand accelerated by ongoing global conflicts. The Army currently spends hundreds of millions of dollars annually on data centers, a figure expected to climb with the growing use of AI and drone technologies in modern warfare.

Carlyle and KKR to Add 4 GW of Capacity by 2029

Under the proposed agreements, the two firms will significantly expand the Army's data infrastructure. Carlyle is set to construct a data center with a capacity of 2.5 to 3 gigawatts on approximately 1,384 acres at Fort Bliss in Texas. This project is scheduled to begin operations with 200 megawatts in 2027 and reach full operational status in 2028. KKR, leveraging its portfolio company CyrusOne, will develop a 1-gigawatt data center in Utah, which is expected to be operational by 2029. The structure of the deals allows the Army to secure a dedicated portion of the computing power while the private equity firms can sell the excess capacity to commercial customers, creating a dual-use operating model.

Deal Creates Blueprint for Future Military Ventures

This partnership marks a strategic shift, creating a new template for financing critical military infrastructure with private capital. Army Secretary Dan Driscoll indicated that this model could be replicated for other needs, suggesting future joint ventures with private firms to invest in assets like mines to secure raw materials for weapons production. By having private entities fund, build, and operate these facilities, the Army can rapidly scale its capabilities without direct capital expenditure. Officials from both sides have expressed expectations that more such transactions will follow, signaling a deeper integration between the U.S. military and the $13 trillion private capital industry.