Microsoft has broken ground on a 48-megawatt data center campus in the Alviso neighborhood of San Jose, marking the company's first purpose-built, company-owned and operated data center in the city.

City officials and Microsoft representatives gathered Wednesday for the groundbreaking of a project they say will help meet rising demand for cloud computing and artificial intelligence infrastructure.

A First for Microsoft in San Jose

Jonathan Noble, Microsoft's senior director of government affairs, confirmed that the new facility represents the company's inaugural purpose-built, company-owned and operated data center in San Jose.

The project is being constructed by HITT Contracting, with John Kane, senior vice president at the firm, overseeing the work. Kane said construction is expected to be completed in approximately 18 months.

The campus will operate at 48 megawatts of capacity, positioning it as a significant addition to the region's digital infrastructure landscape at a time when demand for data processing power tied to artificial intelligence applications continues to grow rapidly.

Jobs During Construction and Beyond

Kane said the facility will employ more than 600 workers at peak construction. Once operational, San Jose Mayor Matt Mahan said the data center will support more than 100 ongoing jobs.

Mahan has been a vocal proponent of the project, framing data centers as essential to the functioning of modern society.

"You need this backbone of infrastructure to power the modern world," Mahan said at the groundbreaking event.

The mayor described data centers broadly as "critical infrastructure" required to support services spanning healthcare, transportation, and artificial intelligence.

Noble echoed that framing, stating that the facility will support digital systems people rely on every day, including online transactions, hospital operations, medical records, and 911 emergency systems.

Sustainability Features

City officials said the project includes several environmental commitments. The data center will use 100 percent recycled water for its cooling systems and will be powered by renewable energy.

Officials also noted that the facility will be capable of supplying power back to the electrical grid during periods of high demand, a feature that could help stabilize regional energy supply during peak usage periods.

The inclusion of recycled water for cooling is a notable design choice for a facility of this scale. Data centers are typically large consumers of water, used to manage the significant heat generated by server hardware operating continuously at high loads.

San Jose as a Growing Data Center Hub

The groundbreaking comes as the broader Bay Area region has seen increased interest in data center development tied to the expansion of artificial intelligence services.

The Alviso neighborhood, located in the northern portion of San Jose near the southern edge of San Francisco Bay, becomes the site of Microsoft's latest infrastructure investment in the region.

The project is not without context in the wider South Bay.

Gilroy residents have recently pushed back on a separate Amazon data center project in that city, reflecting the tensions that can arise when large-scale technology infrastructure projects intersect with local communities.

San Jose's leadership, by contrast, has embraced the Microsoft facility, with Mayor Mahan publicly championing its role in supporting essential services.

Noble's remarks at the ceremony underscored Microsoft's view of such facilities as foundational to digital life, noting the range of everyday systems the campus will help power once it becomes operational following the projected 18-month construction timeline.