California High-Speed Rail Eyes AI Data Centers to Boost Funding

The California High-Speed Rail Authority (CHSRA) is pursuing new funding strategies after the withdrawal of US$4 billion in federal grants by the Trump administration. Ian Choudri, CEO, CHSRA, has proposed diversifying revenue sources, including leasing land for AI data centers, selling rights for fiber optic cables, and fostering other commercial partnerships, aiming to generate between 30% and 40% of fare revenue from these initiatives.

“Investors from Silicon Valley are contacting us and asking, ‘Hey, can we move data centers to Fresno and connect them to your renewable power grid?’” Choudri tells Forbes.

A long-term financing plan proposed by California Governor Gavin Newsom is central to the project’s viability, offering an additional US$1 billion annually until 2045 through the state’s cap-and-trade program. This legislation, along with a bill to streamline permitting, can be key to building private investor confidence. “People want to see a solid plan to deliver the project on time,” says California Senator Scott Wiener.

The CHSRA has already begun procuring steel and other materials for track installation. So far, 2,300 parcels have been acquired, environmental approvals are nearly complete, and construction is ongoing, employing more than 15,000 workers on the 191km Fresno–Bakersfield segment. However, after 16 years, no high-speed rail track has yet been installed, says the US Department of Transportation.

The revised plan calls for completing the Central Valley segment by 2033, followed by extensions north to San Francisco and San Jose and south to Palmdale beginning in 2039. Core to Choudri’s strategy is maximizing revenue from non-traditional assets, such as leasing land for data centers powered by the project’s solar parks and promoting real estate development in lower-cost Central Valley cities.

Jerry Dyer, Mayor of Fresno, says that connecting the city to the high-speed system could transform the local economy. “It will allow people who work in Silicon Valley to commute and live in Fresno. That is exciting for us in Fresno because it would transform our local economy,” says Dyer. Choudri says that once completed, travel between San Jose and Fresno could take as little as 45 minutes.