Canada Invests $240M to Advance AI Data Center Capacity

The Canadian government is investing C$240 million ($169 million) to help Toronto-based AI startup Cohere to expand its data center AI compute capacity.

The investment is intended to help drive the construction of a state-of-the-art AI data center on Canadian soil, with operations scheduled to begin in 2025.

The new data center will use Nvidia GPUs and involve New Jersey-based CoreWeave in construction.

The government’s plan is for the facility to become a cornerstone of Canada’s AI infrastructure, providing crucial computing resources to the broader AI ecosystem.

The initial investment is designed to attract substantial private capital, ultimately spawning a multibillion-dollar facility, Canada’s Department of Finance said in a news release.

Canada’s High-Growth AI Data Center Industry

The investment is part of the $2.4 billion Canadian Sovereign AI Compute Strategy that the Canadian government announced as part of its 2024 budget. Of that total, the Canadian government expects to invest $700 million in new or expanded data centers, of which the Cohere investment is the first such piece.

AI workloads generally require more hardware resources than typical data center workloads. The technology requires specific AI accelerator technology and GPUs, more CPU performance, more power as well as cooling. Multiple reports this year, including one from Moody’s have highlighted the recent surge in data center demand as being driven by AI requirements.

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“We are delivering on our commitment to secure Canada’s AI advantage with monumental investments in Canadian AI leaders and Canadian AI compute,” said Chrystia Freeland, Canada’s Deputy Prime Minister and Minister of Finance.

“Our $240 million investment in Cohere is crowding in a multibillion-dollar private investment to build compute capacity, which will create more good Canadian jobs paying higher wages.”

Cohere’s AI-ready data center in Canada will utilize Nvidia GPUs

Why Cohere Needs a Big Data Center for AI Compute

Founded in 2019, Cohere has rapidly emerged as a leading force in generative AI and large language models competing against industry giants including OpenAI.

Cohere develops enterprise focused generative AI models that aim to solve business challenges. The company’s technologies enable companies to deploy AI-driven applications such as chatbots, search engines, copywriting tools, and content moderation systems. Cohere benefits from a series of industry partnerships including one with Oracle.

“We’re proud the Canadian government is further investing in the AI industry to build a supercomputer in Canada," Cohere told Data Center Knowledge in emailed comments this week.

Related:Global Data Center Market Projected to Near $500 Billion by 2029

“This support will enable Cohere to continue to train and develop state-of-the-art AI technology that serves the needs of global enterprises.”

Canada’s Growing Data Center Market

The new AI data center funding has been received positively by experts in the Canadian market.

“Great to see Cohere partner with the Canadian government on a multi-billion dollar compute project. This sets the stage for continued [Canadian] leadership on AI,” wrote Jaxson Khan, chief of staff at the Institute for Law & AI in an X post.

“Cohere is particularly compelling given their strength in real-world enterprise use cases.”

Read more of the latest AI data center news

The new AI data center buildout comes as the overall market in Canada is set to expand.

Next Move Strategy Consulting has forecast that the Canada Data Center Market is set to grow at a compound annual growth rate (CAGR) of 11.7% between 2024 to 2030, hitting $22.4 billion by 2030.

Canada is home to multiple global data center operators including Equinix, Vantage Data Centers, and Cologix. All the major cloud providers are also active in the country. Amazon Web Services (AWS) has publicly stated that it plans on investing up to $18.3 billion by 2037 into its Canadian cloud data center operations.

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Cloudscene ranks Canada fifth globally in terms of data center density, with the country currently home to 336 data centers.