Deloitte notes data centres are highly capital-intensive and labor-light, but their benefits arise indirectly through data-driven business models, automation, and broader innovation.

Developers point to constraints like reliable electricity supply, prompting more investment in generation, storage, and network infrastructure.

Data-centre stocks rallied on the back of the report, with Goodman Group, NEXTDC, Megaport, Macquarie Technology Group and DigiCo Infrastructure all posting strong gains.

Australia has become the world’s third-largest destination for AI investment, behind the United States and China, according to Commonwealth Bank of Australia analysts.

Australia’s business investment in data centres has surged to about AU$52 billion in planned or started projects, up from AU$23 billion six months earlier, placing Australia second globally after the United States.

Recent productivity data show mixed results, with multifactor productivity down 0.5% in 2024-25 as mining, hospitality, manufacturing, and construction declined, while IT and agriculture/arts sectors improved.

Analysts say data-centre growth could shift the economy from laggard to leader in investment, underpinned by energy infrastructure and digital investment.

The data-centre boom spans all states and territories, but is particularly concentrated in New South Wales and Victoria, driven by AI and productivity-focused digital infrastructure.

The expanded data-centre outlook is set to lift productivity in Australia, a country currently facing low potential growth and higher inflation.

This surge has reshaped broader investment trends, helping to fuel a rebound in total business investment and drawing attention from the Reserve Bank as a surprising turn in the economy.

The overall tone remains optimistic about AI-driven productivity gains, though infrastructure constraints and the need for broader, longer-term gains temper the enthusiasm.

Governments and businesses are betting AI-enabled data-centre expansion can sustain growth despite ongoing productivity challenges.