Brazil's Digital Infrastructure Surges Amidst AI and Cloud Computing Boom

Accelerated Growth in Brazil's Digital Infrastructure

Brazil's digital infrastructure sector is experiencing a period of unprecedented growth, largely driven by the escalating demands of artificial intelligence (AI) and cloud computing. This expansion positions the country as a pivotal hub for data center investments in Latin America. The market is projected to grow significantly, with forecasts indicating a rise from **USD 4,734.5 million in 2024** to an estimated **USD 12,985.0 million by 2035**, reflecting a compound annual growth rate (CAGR) of **9.61%** during the 2025–2035 forecast period.

Significant Investments Fuel Expansion

The robust growth is underpinned by substantial investments from both domestic and international players. Total investments in data centers and cloud computing across Latin America reached **$19.73 billion in 2023**, with Brazil alone anticipating estimated investments of **BRL 258.1 billion** between 2024 and 2027. Projections suggest that spending on data centers in Brazil could exceed **R$ 60 billion** (approximately **USD 12.2 billion**) over the next four years, with more optimistic scenarios reaching **R$ 100 billion** (approximately **USD 20.3 billion**). Major global technology companies are committing significant capital; for instance, **Microsoft** announced a **$2.70 billion investment** in cloud and AI infrastructure over three years, and **Amazon Web Services (AWS)** plans to invest **$1.80 billion** through 2034 to expand its data center operations.

Key Drivers and Strategic Advantages

Beyond AI and cloud computing, several factors contribute to Brazil's attractiveness for data center development. These include rapid digital transformation, increasing internet penetration, the expansion of e-commerce and fintech platforms, and a growing demand for data localization and low-latency services. Brazil also boasts a significant strategic advantage in its energy matrix, with approximately **85%** of its electricity generated from renewable sources. This predominantly clean energy supply is crucial for the energy-intensive data center industry, aligning with global sustainability goals and attracting investments in 'green data centers'.

Government Support and Emerging Challenges

The Brazilian government has actively fostered this growth through supportive public policies and initiatives. The **Brazilian Plan for Artificial Intelligence (PBIA)** and a forthcoming national data center policy, expected in May 2025, aim to provide tax incentives and legal security for the sector. Additionally, the **Redata provisional measure** introduces tax exemptions for data centers. However, the sector faces challenges such as high capital investment requirements, rising energy and cooling costs, complex regulatory and permitting processes, and a high tax burden, particularly on imported IT hardware.

Major Projects and Future Outlook

The current installed data center infrastructure in Brazil is around **800 megawatts**, with new projects expected to add an additional **2,000 megawatts**, bringing total investments to approximately **US$ 20 billion**. Key projects include **Scala IA City** in Rio Grande do Sul, an ambitious undertaking with an estimated capital expenditure of **US$1.54 billion** and a projected final capacity of up to **4.75 GW**. Another significant development is **Rio IA City** in Rio de Janeiro, led by **Elea Data Centers**, with an initial investment of **R$9 billion** (approximately **US$1.73 billion**) and the potential to scale to **R$50 billion** (approximately **US$9.62 billion**) and **1.5 GW** by 2028. These large-scale developments, concentrated primarily in the South/Southeast axis, including **São Paulo** and **Rio de Janeiro**, underscore Brazil's commitment to becoming a leading digital economy.