Machinery and equipment spending by IT firms hit record levels as Australia looked to cash in on the artificial intelligence boom, Deloitte Access Economics found in its quarterly investment monitor.
It remained too early to tell whether AI would provide the sustained boost to productivity needed to lift Australia's growth potential and living standards, the report said.
But investment in technology infrastructure would enable more data-intensive business models, greater automation and innovation across other industries.
However, developers were increasingly running into constraints, most notably around access to reliable electricity, Deloitte Access Economics director and lead author Sheraan Underwood said.
"The vast majority of these projects remain in the planning stages, meaning the pipeline has yet to translate into a sustained lift in construction activity," he said.
"Progress will depend on continued growth in the use of AI, as well as access to a stable and cost-effective supply of electricity.
"Nonetheless, data centres now represent one of the fastest-growing segments of the national project pipeline and a potentially significant source of future investment."
Despite the challenges of the energy transition, Australia's strategic location in the Asia-Pacific and relatively stable regulatory frameworks have made it the second-largest destination for data centre investment after the United States.
An extra $28 billion worth of data centre projects were added to Deloitte Access Economics' database in the past year, driving a 57 per cent rise in the value of projects in the finance, property and business services industry.
These include the $5 billion Mamre Road data centre - a sprawling campus comprising six four-storey buildings capable of providing up to 1GB of data power - and the $3.1 billion Marsden Park data centre, both in Sydney's west.
A sharp rise in data centre investment contributed to private demand exceeding Reserve Bank forecasts in the second half of 2025, which the central bank cited as a key factor behind its decision to hike interest rates on Tuesday.
The surprising speed of the private sector recovery was also underpinned by strong household spending.
A one per cent rise in household spending in November, as reported by the Australian Bureau of Statistics, pushed annual growth in the measure to a two-year high of 6.3 per cent.
But consumer confidence has since taken a hit amid expectations of higher borrowing costs.
Economists expect a slowdown in growth when the statistics bureau releases December spending figures on Monday.
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