What it means
Colocation, or colo, is a data-center model where an operator builds and runs the facility — power, cooling, security and network connectivity — and leases the space to tenants who bring their own compute. Wholesale colocation leases large blocks of capacity, often whole halls or megawatts, to a single hyperscaler or AI cloud, while retail colo rents smaller footprints. In the AI supply chain, colocation is the fast lane between a construction pipeline and live GPU clusters: rather than build from scratch, an AI operator can lease ready or near-ready capacity from a specialist. That makes the scarce inputs — secured power, land near the grid, and liquid-cooling-ready halls — the real product. Colo operators effectively monetize their ability to line up power and deliver space faster than a tenant could alone.
Why it matters to investors
Colocation operators sit on the scarce combination of secured power and buildable land, which gives them pricing leverage when AI demand outruns available capacity. GDS Holdings, NEXTDC, AirTrunk and Keppel DC REIT are exposed to how tight wholesale data-center supply becomes as hyperscalers race to lease.
Companies on this part of the chain
Named to show where the term sits in the AI supply chain — research, not advice, and never a recommendation to buy or sell.
Related terms
See Colocation in the live AI chain.
THE ENTITY maps every constraint onto one live model — which part is tight now, who owns it, and who gets squeezed when it moves. Plain-English reads you can check.
THE ENTITY is an educational read on the AI supply chain — research, not investment advice. It explains how the chain works and who sits where, never price targets or buy/sell calls.