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Supercharge Your RAG with Multi-Agent Self-RAG

Introduction Many of us might have tried to build a RAG application and noticed it falls significantly short of addressing real-life needs. Why is that? It’s because many real-world problems require multiple steps of information retrieval and reasoning. We need our agent to perform those as humans normally do, yet most RAG applications fall short […]

Introduction

Many of us might have tried to build a RAG application and noticed it falls significantly short of addressing real-life needs. Why is that? It’s because many real-world problems require multiple steps of information retrieval and reasoning. We need our agent to perform those as humans normally do, yet most RAG applications fall short of this.

This article explores how to supercharge your RAG application by making its data retrieval and reasoning process similar to how a human would, under a multi-agent framework. The framework presented here is based on the Self-RAG strategy but has been significantly modified to enhance its capabilities. Prior knowledge of the original strategy is not necessary for reading this article.

Real-life Case

Consider this: I was going to fly from Delhi to Munich (let’s assume I am taking the flight from an EU airline), but I was denied boarding somehow. Now I want to know what the compensation should be.

These two webpages contain relevant information, I go ahead adding them to my vector store, trying to have my agent answer this for me by retrieving the right information.

Now, I pass this question to the vector store: “how much can I receive if I am denied boarding, for flights from Delhi to Munich?”.

– – – – – – – – – – – – – – – – – – – – – – – – –
Overview of US Flight Compensation Policies To get compensation for delayed flights, you should contact your airline via their customer service or go to the customer service desk. At the same time, you should bear in mind that you will only receive compensation if the delay is not weather-related and is within the carrier`s control. According to the US Department of Transportation, US airlines are not required to compensate you if a flight is cancelled or delayed. You can be compensated if you are bumped or moved from an overbooked flight. If your provider cancels your flight less than two weeks before departure and you decide to cancel your trip entirely, you can receive a refund of both pre-paid baggage fees and your plane ticket. There will be no refund if you choose to continue your journey. In the case of a delayed flight, the airline will rebook you on a different flight. According to federal law, you will not be provided with money or other compensation. Comparative Analysis of EU vs. US Flight Compensation Policies
– – – – – – – – – – – – – – – – – – – – – – – – –
(AUTHOR-ADDED NOTE: IMPORTANT, PAY ATTENTION TO THIS)
Short-distance flight delays – if it is up to 1,500 km, you are due 250 Euro compensation.
Medium distance flight delays – for all the flights between 1,500 and 3,500 km, the compensation should be 400 Euro.
Long-distance flight delays – if it is over 3,500 km, you are due 600 Euro compensation. To receive this kind of compensation, the following conditions must be met; Your flight starts in a non-EU member state or in an EU member state and finishes in an EU member state and is organised by an EU airline. Your flight reaches the final destination with a delay that exceeds three hours. There is no force majeure.
– – – – – – – – – – – – – – – – – – – – – – – – –
Compensation policies in the EU and US are not the same, which implies that it is worth knowing more about them. While you can always count on Skycop flight cancellation compensation, you should still get acquainted with the information below.
– – – – – – – – – – – – – – – – – – – – – – – – –
Compensation for flight regulations EU: The EU does regulate flight delay compensation, which is known as EU261. US: According to the US Department of Transportation, every airline has its own policies about what should be done for delayed passengers. Compensation for flight delays EU: Just like in the United States, compensation is not provided when the flight is delayed due to uncontrollable reasons. However, there is a clear approach to compensation calculation based on distance. For example, if your flight was up to 1,500 km, you can receive 250 euros. US: There are no federal requirements. That is why every airline sets its own limits for compensation in terms of length. However, it is usually set at three hours. Overbooking EU: In the EU, they call for volunteers if the flight is overbooked. These people are entitled to a choice of: Re-routing to their final destination at the earliest opportunity. Refund of their ticket cost within a week if not travelling. Re-routing at a later date at the person`s convenience.

Unfortunately, they contain only generic flight compensation policies, without telling me how much I can expect when denied boarding from Delhi to Munich specifically. If the RAG agent takes these as the sole context, it can only provide a generic answer about flight compensation policy, without giving the answer we want.

However, while the documents are not immediately useful, there is an important insight contained in the 2nd piece of context: compensation varies according to flight distance. If the RAG agent thinks more like human, it should follow these steps to provide an answer:

  1. Based on the retrieved context, reason that compensation varies with flight distance
  2. Next, retrieve the flight distance between Delhi and Munich
  3. Given the distance (which is around 5900km), classify the flight as a long-distance one
  4. Combined with the previously retrieved context, figure out I am due 600 EUR, assuming other conditions are fulfilled

This example demonstrates how a simple RAG, in which a single retrieval is made, fall short for several reasons:

  1. Complex Queries: Users often have questions that a simple search can’t fully address. For example, “What’s the best smartphone for gaming under $500?” requires consideration of multiple factors like performance, price, and features, which a single retrieval step might miss.
  2. Deep Information: Some information lies across documents. For example, research papers, medical records, or legal documents often include references that need to be made sense of, before one can fully understand the content of a given article. Multiple retrieval steps help dig deeper into the content.

Multiple retrievals supplemented with human-like reasoning allow for a more nuanced, comprehensive, and accurate response, adapting to the complexity and depth of user queries.

Multi-Agent Self-RAG

Here I explain the reasoning process behind this strategy, afterwards I will provide the code to show you how to achieve this!

Note: For readers interested in knowing how my approach differs from the original Self-RAG, I will describe the discrepancies in quotation boxes like this. But general readers who are unfamiliar with the original Self-RAG can skip them.

In the below graphs, each circle represents a step (aka Node), which is performed by a dedicated agent working on the specific problem. We orchestrate them to form a multi-agent RAG application.

1st iteration: Simple RAG

A simple RAG chain

This is just the vanilla RAG approach I described in “Real-life Case”, represented as a graph. After Retrieve documents, the new_documents will be used as input for Generate Answer. Nothing special, but it serves as our starting point.

2nd iteration: Digest documents with “Grade documents”

Reasoning like human do

Remember I said in the “Real-life Case” section, that as a next step, the agent should “reason that compensation varies with flight distance”? The Grade documents step is exactly for this purpose.

Given the new_documents, the agent will try to output two items:

  1. useful_documents: Comparing the question asked, it determines if the documents are useful, and retain a memory for those deemed useful for future reference. As an example, since our question does not concern compensation policies for US, documents describing those are discarded, leaving only those for EU
  2. hypothesis: Based on the documents, the agent forms a hypothesis about how the question can be answered, that is, flight distance needs to be identified

Notice how the above reasoning resembles human thinking! But still, while these outputs are useful, we need to instruct the agent to use them as input for performing the next document retrieval. Without this, the answer provided in Generate answer is still not useful.

useful_documents are appended for each document retrieval loop, instead of being overwritten, to keep a memory of documents that are previously deemed useful. hypothesis is formed from useful_documents and new_documents to provide an “abstract reasoning” to inform how query is to be transformed subsequently.

The hypothesis is especially useful when no useful documents can be identified initially, as the agent can still form hypothesis from documents not immediately deemed as useful / only bearing indirect relationship to the question at hand, for informing what questions to ask next

3rd iteration: Brainstorm new questions to ask

Suggest questions for additional information retrieval

We have the agent reflect upon whether the answer is useful and grounded in context. If not, it should proceed to Transform query to ask further questions.

The output new_queries will be a list of new questions that the agent consider useful for obtaining extra information. Given the useful_documents (compensation policies for EU), and hypothesis (need to identify flight distance between Delhi and Munich), it asks questions like “What is the distance between Delhi and Munich?”

Now we are ready to use the new_queries for further retrieval!

The transform_query node will use useful_documents (which are accumulated per iteration, instead of being overwritten) and hypothesis as input for providing the agent directions to ask new questions.

The new questions will be a list of questions (instead of a single question) separated from the original question, so that the original question is kept in state, otherwise the agent could lose track of the original question after multiple iterations.

Final iteration: Further retrieval with new questions

Issuing new queries to retrieve extra documents

The output new_queries from Transform query will be passed to the Retrieve documents step, forming a retrieval loop.

Since the question “What is the distance between Delhi and Munich?” is asked, we can expect the flight distance is then retrieved as new_documents, and subsequently graded as useful_documents, further used as an input for Generate answer.

The grade_documents node will compare the documents against both the original question and new_questions list, so that documents that are considered useful for new_questions, even if not so for the original question, are kept.

This is because those documents might help answer the original question indirectly, by being relevant to new_questions (like “What is the distance between Delhi and Munich?”)

Final answer!

Equipped with this new context about flight distance, the agent is now ready to provide the right answer: 600 EUR!

Next, let us now dive into the code to see how this multi-agent RAG application is created.

Implementation

The source code can be found here. Our multi-agent RAG application involves iterations and loops, and LangGraph is a great library for building such complex multi-agent application. If you are not familiar with LangGraph, you are strongly suggested to have a look at LangGraph’s Quickstart guide to understand more about it!

To keep this article concise, I will focus on the key code snippets only.

Important note: I am using OpenRouter as the Llm interface, but the code can be easily adapted for other LLM interfaces. Also, while in my code I am using Claude 3.5 Sonnet as model, you can use any LLM as long as it support tools as parameter (check this list here), so you can also run this with other models, like DeepSeek V3 and OpenAI o1!

State definition

In the previous section, I have defined various elements e.g. new_documentshypothesis that are to be passed to each step (aka Nodes), in LangGraph’s terminology these elements are called State.

We define the State formally with the following snippet.

from typing import List, Annotated
from typing_extensions import TypedDict

def append_to_list(original: list, new: list) -> list:
original.append(new)
return original

def combine_list(original: list, new: list) -> list:
return original + new

class GraphState(TypedDict):
"""
Represents the state of our graph.

Attributes:
question: question
generation: LLM generation
new_documents: newly retrieved documents for the current iteration
useful_documents: documents that are considered useful
graded_documents: documents that have been graded
new_queries: newly generated questions
hypothesis: hypothesis
"""

question: str
generation: str
new_documents: List[str]
useful_documents: Annotated[List[str], combine_list]
graded_documents: List[str]
new_queries: Annotated[List[str], append_to_list]
hypothesis: str

Graph definition

This is where we combine the different steps to form a “Graph”, which is a representation of our multi-agent application. The definitions of various steps (e.g. grade_documents) are represented by their respective functions.

from langgraph.graph import END, StateGraph, START
from langgraph.checkpoint.memory import MemorySaver
from IPython.display import Image, display

workflow = StateGraph(GraphState)

# Define the nodes
workflow.add_node("retrieve", retrieve) # retrieve
workflow.add_node("grade_documents", grade_documents) # grade documents
workflow.add_node("generate", generate) # generatae
workflow.add_node("transform_query", transform_query) # transform_query

# Build graph
workflow.add_edge(START, "retrieve")
workflow.add_edge("retrieve", "grade_documents")
workflow.add_conditional_edges(
"grade_documents",
decide_to_generate,
{
"transform_query": "transform_query",
"generate": "generate",
},
)
workflow.add_edge("transform_query", "retrieve")
workflow.add_conditional_edges(
"generate",
grade_generation_v_documents_and_question,
{
"useful": END,
"not supported": "transform_query",
"not useful": "transform_query",
},
)

# Compile
memory = MemorySaver()
app = workflow.compile(checkpointer=memory)
display(Image(app.get_graph(xray=True).draw_mermaid_png()))

Running the above code, you should see this graphical representation of our RAG application. Notice how it is essentially equivalent to the graph I have shown in the final iteration of “Enhanced Self-RAG Strategy”!

Visualizing the multi-agent RAG graph

After generate, if the answer is considered “not supported”, the agent will proceed to transform_query intead of to generate again, so that the agent will look for additional information rather than trying to regenerate answers based on existing context, which might not suffice for providing a “supported” answer

Now we are ready to put the multi-agent application to test! With the below code snippet, we ask this question how much can I receive if I am denied boarding, for flights from Delhi to Munich?

from pprint import pprint
config = {"configurable": {"thread_id": str(uuid4())}}

# Run
inputs = {
"question": "how much can I receive if I am denied boarding, for flights from Delhi to Munich?",
}
for output in app.stream(inputs, config):
for key, value in output.items():
# Node
pprint(f"Node '{key}':")
# Optional: print full state at each node
# print(app.get_state(config).values)
pprint("n---n")

# Final generation
pprint(value["generation"])

While output might vary (sometimes the application provides the answer without any iterations, because it “guessed” the distance between Delhi and Munich), it should look something like this, which shows the application went through multiple rounds of data retrieval for RAG.

---RETRIEVE---
"Node 'retrieve':"
'n---n'
---CHECK DOCUMENT RELEVANCE TO QUESTION---
---GRADE: DOCUMENT NOT RELEVANT---
---GRADE: DOCUMENT RELEVANT---
---GRADE: DOCUMENT NOT RELEVANT---
---GRADE: DOCUMENT NOT RELEVANT---
---ASSESS GRADED DOCUMENTS---
---DECISION: GENERATE---
"Node 'grade_documents':"
'n---n'
---GENERATE---
---CHECK HALLUCINATIONS---
'---DECISION: GENERATION IS NOT GROUNDED IN DOCUMENTS, RE-TRY---'
"Node 'generate':"
'n---n'
---TRANSFORM QUERY---
"Node 'transform_query':"
'n---n'
---RETRIEVE---
"Node 'retrieve':"
'n---n'
---CHECK DOCUMENT RELEVANCE TO QUESTION---
---GRADE: DOCUMENT NOT RELEVANT---
---GRADE: DOCUMENT NOT RELEVANT---
---GRADE: DOCUMENT RELEVANT---
---GRADE: DOCUMENT NOT RELEVANT---
---GRADE: DOCUMENT NOT RELEVANT---
---GRADE: DOCUMENT NOT RELEVANT---
---GRADE: DOCUMENT NOT RELEVANT---
---ASSESS GRADED DOCUMENTS---
---DECISION: GENERATE---
"Node 'grade_documents':"
'n---n'
---GENERATE---
---CHECK HALLUCINATIONS---
---DECISION: GENERATION IS GROUNDED IN DOCUMENTS---
---GRADE GENERATION vs QUESTION---
---DECISION: GENERATION ADDRESSES QUESTION---
"Node 'generate':"
'n---n'
('Based on the context provided, the flight distance from Munich to Delhi is '
'5,931 km, which falls into the long-distance category (over 3,500 km). '
'Therefore, if you are denied boarding on a flight from Delhi to Munich '
'operated by an EU airline, you would be eligible for 600 Euro compensation, '
'provided that:n'
'1. The flight is operated by an EU airlinen'
'2. There is no force majeuren'
'3. Other applicable conditions are metn'
'n'
"However, it's important to note that this compensation amount is only valid "
'if all the required conditions are met as specified in the regulations.')

And the final answer is what we aimed for!

Based on the context provided, the flight distance from Munich to Delhi is
5,931 km, which falls into the long-distance category (over 3,500 km).
Therefore, if you are denied boarding on a flight from Delhi to Munich
operated by an EU airline, you would be eligible for 600 Euro compensation,
provided that:
1. The flight is operated by an EU airline
2. There is no force majeure
3. Other applicable conditions are met

However, it's important to note that this compensation amount is only valid
if all the required conditions are met as specified in the regulations.

Inspecting the State, we see how the hypothesis and new_queries enhance the effectiveness of our multi-agent RAG application by mimicking human thinking process.

Hypothesis

print(app.get_state(config).values.get('hypothesis',""))
--- Output ---
To answer this question accurately, I need to determine:

1. Is this flight operated by an EU airline? (Since Delhi is non-EU and Munich is EU)
2. What is the flight distance between Delhi and Munich? (To determine compensation amount)
3. Are we dealing with a denied boarding situation due to overbooking? (As opposed to delay/cancellation)

From the context, I can find information about compensation amounts based on distance, but I need to verify:
- If the flight meets EU compensation eligibility criteria
- The exact distance between Delhi and Munich to determine which compensation tier applies (250€, 400€, or 600€)
- If denied boarding compensation follows the same amounts as delay compensation

The context doesn't explicitly state compensation amounts specifically for denied boarding, though it mentions overbooking situations in the EU require offering volunteers re-routing or refund options.

Would you like me to proceed with the information available, or would you need additional context about denied boarding compensation specifically?

New Queries

for questions_batch in app.get_state(config).values.get('new_queries',""):
for q in questions_batch:
print(q)
--- Output ---
What is the flight distance between Delhi and Munich?
Does EU denied boarding compensation follow the same amounts as flight delay compensation?
Are there specific compensation rules for denied boarding versus flight delays for flights from non-EU to EU destinations?
What are the compensation rules when flying with non-EU airlines from Delhi to Munich?
What are the specific conditions that qualify as denied boarding under EU regulations?

Conclusion

Simple RAG, while easy to build, might fall short in tackling real-life questions. By incorporating human thinking process into a multi-agent RAG framework, we are making RAG applications much more practical.

*Unless otherwise noted, all images are by the author


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Microsoft did not immediately respond to a request for comment. Microsoft’s constraints Analysts say the twin departures mark a significant setback for Microsoft at a critical moment in the AI data center race, with pressure mounting from both OpenAI’s model demands and Google’s infrastructure scale. “Losing some of the best professionals working on this challenge could set Microsoft back,” said Neil Shah, partner and co-founder at Counterpoint Research. “Solving the energy wall is not trivial, and there may have been friction or strategic differences that contributed to their decision to move on, especially if they saw an opportunity to make a broader impact and do so more lucratively at a company like Nvidia.” Even so, Microsoft has the depth and ecosystem strength to continue doubling down on AI data centers, said Prabhu Ram, VP for industry research at Cybermedia Research. According to Sanchit Gogia, chief analyst at Greyhound Research, the departures come at a sensitive moment because Microsoft is trying to expand its AI infrastructure faster than physical constraints allow. “The executives who have left were central to GPU cluster design, data center engineering, energy procurement, and the experimental power and cooling approaches Microsoft has been pursuing to support dense AI workloads,” Gogia said. “Their exit coincides with pressures the company has already acknowledged publicly. GPUs are arriving faster than the company can energize the facilities that will house them, and power availability has overtaken chip availability as the real bottleneck.”

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What is Edge AI? When the cloud isn’t close enough

Many edge devices can periodically send summarized or selected inference output data back to a central system for model retraining or refinement. That feedback loop helps the model improve over time while still keeping most decisions local. And to run efficiently on constrained edge hardware, the AI model is often pre-processed by techniques such as quantization (which reduces precision), pruning (which removes redundant parameters), or knowledge distillation (which trains a smaller model to mimic a larger one). These optimizations reduce the model’s memory, compute, and power demands so it can run more easily on an edge device. What technologies make edge AI possible? The concept of the “edge” always assumes that edge devices are less computationally powerful than data centers and cloud platforms. While that remains true, overall improvements in computational hardware have made today’s edge devices much more capable than those designed just a few years ago. In fact, a whole host of technological developments have come together to make edge AI a reality. Specialized hardware acceleration. Edge devices now ship with dedicated AI-accelerators (NPUs, TPUs, GPU cores) and system-on-chip units tailored for on-device inference. For example, companies like Arm have integrated AI-acceleration libraries into standard frameworks so models can run efficiently on Arm-based CPUs. Connectivity and data architecture. Edge AI often depends on durable, low-latency links (e.g., 5G, WiFi 6, LPWAN) and architectures that move compute closer to data. Merging edge nodes, gateways, and local servers means less reliance on distant clouds. And technologies like Kubernetes can provide a consistent management plane from the data center to remote locations. Deployment, orchestration, and model lifecycle tooling. Edge AI deployments must support model-update delivery, device and fleet monitoring, versioning, rollback and secure inference — especially when orchestrated across hundreds or thousands of locations. VMware, for instance, is offering traffic management

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Networks, AI, and metaversing

Our first, conservative, view says that AI’s network impact is largely confined to the data center, to connect clusters of GPU servers and the data they use as they crunch large language models. It’s all “horizontal” traffic; one TikTok challenge would generate way more traffic in the wide area. WAN costs won’t rise for you as an enterprise, and if you’re a carrier you won’t be carrying much new, so you don’t have much service revenue upside. If you don’t host AI on premises, you can pretty much dismiss its impact on your network. Contrast that with the radical metaverse view, our third view. Metaverses and AR/VR transform AI missions, and network services, from transaction processing to event processing, because the real world is a bunch of events pushing on you. They also let you visualize the way that process control models (digital twins) relate to the real world, which is critical if the processes you’re modeling involve human workers who rely on their visual sense. Could it be that the reason Meta is willing to spend on AI, is that the most credible application of AI, and the most impactful for networks, is the metaverse concept? In any event, this model of AI, by driving the users’ experiences and activities directly, demands significant edge connectivity, so you could expect it to have a major impact on network requirements. In fact, just dipping your toes into a metaverse could require a major up-front network upgrade. Networks carry traffic. Traffic is messages. More messages, more traffic, more infrastructure, more service revenue…you get the picture. Door number one, to the AI giant future, leads to nothing much in terms of messages. Door number three, metaverses and AR/VR, leads to a message, traffic, and network revolution. I’ll bet that most enterprises would doubt

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Microsoft’s Fairwater Atlanta and the Rise of the Distributed AI Supercomputer

Microsoft’s second Fairwater data center in Atlanta isn’t just “another big GPU shed.” It represents the other half of a deliberate architectural experiment: proving that two massive AI campuses, separated by roughly 700 miles, can operate as one coherent, distributed supercomputer. The Atlanta installation is the latest expression of Microsoft’s AI-first data center design: purpose-built for training and serving frontier models rather than supporting mixed cloud workloads. It links directly to the original Fairwater campus in Wisconsin, as well as to earlier generations of Azure AI supercomputers, through a dedicated AI WAN backbone that Microsoft describes as the foundation of a “planet-scale AI superfactory.” Inside a Fairwater Site: Preparing for Multi-Site Distribution Efficient multi-site training only works if each individual site behaves as a clean, well-structured unit. Microsoft’s intra-site design is deliberately simplified so that cross-site coordination has a predictable abstraction boundary—essential for treating multiple campuses as one distributed AI system. Each Fairwater installation presents itself as a single, flat, high-regularity cluster: Up to 72 NVIDIA Blackwell GPUs per rack, using GB200 NVL72 rack-scale systems. NVLink provides the ultra-low-latency, high-bandwidth scale-up fabric within the rack, while the Spectrum-X Ethernet stack handles scale-out. Each rack delivers roughly 1.8 TB/s of GPU-to-GPU bandwidth and exposes a multi-terabyte pooled memory space addressable via NVLink—critical for large-model sharding, activation checkpointing, and parallelism strategies. Racks feed into a two-tier Ethernet scale-out network offering 800 Gbps GPU-to-GPU connectivity with very low hop counts, engineered to scale to hundreds of thousands of GPUs without encountering the classic port-count and topology constraints of traditional Clos fabrics. Microsoft confirms that the fabric relies heavily on: SONiC-based switching and a broad commodity Ethernet ecosystem to avoid vendor lock-in and accelerate architectural iteration. Custom network optimizations, such as packet trimming, packet spray, high-frequency telemetry, and advanced congestion-control mechanisms, to prevent collective

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Land & Expand: Hyperscale, AI Factory, Megascale

Land & Expand is Data Center Frontier’s periodic roundup of notable North American data center development activity, tracking the newest sites, land plays, retrofits, and hyperscale campus expansions shaping the industry’s build cycle. October delivered a steady cadence of announcements, with several megascale projects advancing from concept to commitment. The month was defined by continued momentum in OpenAI and Oracle’s Stargate initiative (now spanning multiple U.S. regions) as well as major new investments from Google, Meta, DataBank, and emerging AI cloud players accelerating high-density reuse strategies. The result is a clearer picture of how the next wave of AI-first infrastructure is taking shape across the country. Google Begins $4B West Memphis Hyperscale Buildout Google formally broke ground on its $4 billion hyperscale campus in West Memphis, Arkansas, marking the company’s first data center in the state and the anchor for a new Mid-South operational hub. The project spans just over 1,000 acres, with initial site preparation and utility coordination already underway. Google and Entergy Arkansas confirmed a 600 MW solar generation partnership, structured to add dedicated renewable supply to the regional grid. As part of the launch, Google announced a $25 million Energy Impact Fund for local community affordability programs and energy-resilience improvements—an unusually early community-benefit commitment for a first-phase hyperscale project. Cooling specifics have not yet been made public. Water sourcing—whether reclaimed, potable, or hybrid seasonal mode—remains under review, as the company finalizes environmental permits. Public filings reference a large-scale onsite water treatment facility, similar to Google’s deployments in The Dalles and Council Bluffs. Local governance documents show that prior to the October announcement, West Memphis approved a 30-year PILOT via Groot LLC (Google’s land assembly entity), with early filings referencing a typical placeholder of ~50 direct jobs. At launch, officials emphasized hundreds of full-time operations roles and thousands

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The New Digital Infrastructure Geography: Green Street’s David Guarino on AI Demand, Power Scarcity, and the Next Phase of Data Center Growth

As the global data center industry races through its most frenetic build cycle in history, one question continues to define the market’s mood: is this the peak of an AI-fueled supercycle, or the beginning of a structurally different era for digital infrastructure? For Green Street Managing Director and Head of Global Data Center and Tower Research David Guarino, the answer—based firmly on observable fundamentals—is increasingly clear. Demand remains blisteringly strong. Capital appetite is deepening. And the very definition of a “data center market” is shifting beneath the industry’s feet. In a wide-ranging discussion with Data Center Frontier, Guarino outlined why data centers continue to stand out in the commercial real estate landscape, how AI is reshaping underwriting and development models, why behind-the-meter power is quietly reorganizing the U.S. map, and what Green Street sees ahead for rents, REITs, and the next wave of hyperscale expansion. A ‘Safe’ Asset in an Uncertain CRE Landscape Among institutional investors, the post-COVID era was the moment data centers stepped decisively out of “niche” territory. Guarino notes that pandemic-era reliance on digital services crystallized a structural recognition: data centers deliver stable, predictable cash flows, anchored by the highest-credit tenants in global real estate. Hyperscalers today dominate new leasing and routinely sign 15-year (or longer) contracts, a duration largely unmatched across CRE categories. When compared with one-year apartment leases, five-year office leases, or mall anchor terms, the stability story becomes plain. “These are AAA-caliber companies signing the longest leases in the sector’s history,” Guarino said. “From a real estate point of view, that combination of tenant quality and lease duration continues to position the asset class as uniquely durable.” And development returns remain exceptional. Even without assuming endless AI growth, the math works: strong demand, rising rents, and high-credit tenants create unusually predictable performance relative to

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Microsoft will invest $80B in AI data centers in fiscal 2025

And Microsoft isn’t the only one that is ramping up its investments into AI-enabled data centers. Rival cloud service providers are all investing in either upgrading or opening new data centers to capture a larger chunk of business from developers and users of large language models (LLMs).  In a report published in October 2024, Bloomberg Intelligence estimated that demand for generative AI would push Microsoft, AWS, Google, Oracle, Meta, and Apple would between them devote $200 billion to capex in 2025, up from $110 billion in 2023. Microsoft is one of the biggest spenders, followed closely by Google and AWS, Bloomberg Intelligence said. Its estimate of Microsoft’s capital spending on AI, at $62.4 billion for calendar 2025, is lower than Smith’s claim that the company will invest $80 billion in the fiscal year to June 30, 2025. Both figures, though, are way higher than Microsoft’s 2020 capital expenditure of “just” $17.6 billion. The majority of the increased spending is tied to cloud services and the expansion of AI infrastructure needed to provide compute capacity for OpenAI workloads. Separately, last October Amazon CEO Andy Jassy said his company planned total capex spend of $75 billion in 2024 and even more in 2025, with much of it going to AWS, its cloud computing division.

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John Deere unveils more autonomous farm machines to address skill labor shortage

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More Self-driving tractors might be the path to self-driving cars. John Deere has revealed a new line of autonomous machines and tech across agriculture, construction and commercial landscaping. The Moline, Illinois-based John Deere has been in business for 187 years, yet it’s been a regular as a non-tech company showing off technology at the big tech trade show in Las Vegas and is back at CES 2025 with more autonomous tractors and other vehicles. This is not something we usually cover, but John Deere has a lot of data that is interesting in the big picture of tech. The message from the company is that there aren’t enough skilled farm laborers to do the work that its customers need. It’s been a challenge for most of the last two decades, said Jahmy Hindman, CTO at John Deere, in a briefing. Much of the tech will come this fall and after that. He noted that the average farmer in the U.S. is over 58 and works 12 to 18 hours a day to grow food for us. And he said the American Farm Bureau Federation estimates there are roughly 2.4 million farm jobs that need to be filled annually; and the agricultural work force continues to shrink. (This is my hint to the anti-immigration crowd). John Deere’s autonomous 9RX Tractor. Farmers can oversee it using an app. While each of these industries experiences their own set of challenges, a commonality across all is skilled labor availability. In construction, about 80% percent of contractors struggle to find skilled labor. And in commercial landscaping, 86% of landscaping business owners can’t find labor to fill open positions, he said. “They have to figure out how to do

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2025 playbook for enterprise AI success, from agents to evals

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More 2025 is poised to be a pivotal year for enterprise AI. The past year has seen rapid innovation, and this year will see the same. This has made it more critical than ever to revisit your AI strategy to stay competitive and create value for your customers. From scaling AI agents to optimizing costs, here are the five critical areas enterprises should prioritize for their AI strategy this year. 1. Agents: the next generation of automation AI agents are no longer theoretical. In 2025, they’re indispensable tools for enterprises looking to streamline operations and enhance customer interactions. Unlike traditional software, agents powered by large language models (LLMs) can make nuanced decisions, navigate complex multi-step tasks, and integrate seamlessly with tools and APIs. At the start of 2024, agents were not ready for prime time, making frustrating mistakes like hallucinating URLs. They started getting better as frontier large language models themselves improved. “Let me put it this way,” said Sam Witteveen, cofounder of Red Dragon, a company that develops agents for companies, and that recently reviewed the 48 agents it built last year. “Interestingly, the ones that we built at the start of the year, a lot of those worked way better at the end of the year just because the models got better.” Witteveen shared this in the video podcast we filmed to discuss these five big trends in detail. Models are getting better and hallucinating less, and they’re also being trained to do agentic tasks. Another feature that the model providers are researching is a way to use the LLM as a judge, and as models get cheaper (something we’ll cover below), companies can use three or more models to

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OpenAI’s red teaming innovations define new essentials for security leaders in the AI era

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More OpenAI has taken a more aggressive approach to red teaming than its AI competitors, demonstrating its security teams’ advanced capabilities in two areas: multi-step reinforcement and external red teaming. OpenAI recently released two papers that set a new competitive standard for improving the quality, reliability and safety of AI models in these two techniques and more. The first paper, “OpenAI’s Approach to External Red Teaming for AI Models and Systems,” reports that specialized teams outside the company have proven effective in uncovering vulnerabilities that might otherwise have made it into a released model because in-house testing techniques may have missed them. In the second paper, “Diverse and Effective Red Teaming with Auto-Generated Rewards and Multi-Step Reinforcement Learning,” OpenAI introduces an automated framework that relies on iterative reinforcement learning to generate a broad spectrum of novel, wide-ranging attacks. Going all-in on red teaming pays practical, competitive dividends It’s encouraging to see competitive intensity in red teaming growing among AI companies. When Anthropic released its AI red team guidelines in June of last year, it joined AI providers including Google, Microsoft, Nvidia, OpenAI, and even the U.S.’s National Institute of Standards and Technology (NIST), which all had released red teaming frameworks. Investing heavily in red teaming yields tangible benefits for security leaders in any organization. OpenAI’s paper on external red teaming provides a detailed analysis of how the company strives to create specialized external teams that include cybersecurity and subject matter experts. The goal is to see if knowledgeable external teams can defeat models’ security perimeters and find gaps in their security, biases and controls that prompt-based testing couldn’t find. What makes OpenAI’s recent papers noteworthy is how well they define using human-in-the-middle

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