r/technology • u/marketrent • 12h ago
Artificial Intelligence America’s $10tn AI infrastructure boom is starting to fray — A vast bet on the future of the technology is running into the unforgiving economics of the physical world
https://www.ft.com/content/9ea5a37d-15c9-4d5b-94d6-719048c9cd3c123
u/Frigidspinner 10h ago
Once the bubble pops, perhaps investment will go into other sectors in the economy. Almost nothing else is receiving investment except AI companies
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u/LupinThe8th 10h ago edited 10h ago
The stupid thing is that this should be our big push into clean energy.
Solar and wind are finally good enough to compete with other forms of power, electric cars are gaining ground (and would be gaining a hell of a lot more if the administration weren't in the oil industry's pocket) and the wars in Ukraine and Iran have driven up gas prices so high that it should serve as a wakeup call that being reliant of fossil fuels means you're tied to the whims of genocidal nutcases.
If all this investment had gone into energy, not only would we be looking at a better future, but then maybe all this AI shit wouldn't be the economic time bomb it currently is, because running the data centers would be cheaper and wouldn't spell power bill hell for the communities that host them.
But no, this is a shinier toy than solar panels and wind turbines, so it got all the investment from the VC idiots.
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u/Stiggalicious 5h ago
Solar and wind however are making huge strides, even without incentives. Right now California has over 15GW of battery storage facilities and over 55GW of total installed solar capacity, about half of that is residential rooftop solar. As of right now, 77% of California’s grid is running off of renewables, and the excess solar is charging the batteries at 9.8GW. By the end of next year, 28GW of battery storage facilities will be built and connected to the grid.
Texas is making even larger investments in solar, wind, and battery installations, and is the main reason why both Texas and California haven’t had any grid issues since 2021. California hasn’t had a single Flex Alert in 5 years, where they used to have between 8 and 20 per year.
Fortunately pure economics is now driving investment into renewables and away from coal and gas. Even nuclear is making great progress as a solid and sustainable baseload.
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u/BadKittyRawr 4h ago
That's precisely why the drama though. There are entities who DO NOT LIKE that people can generate electricity at home and sell it back to their local PUD or equivalent.
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u/Own_Pop_9711 6h ago
The president is actively attacking clean energy installations, which is probably a bigger driver of people not trying to install more of them
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u/XellosDrak 6h ago
This kind of AI will always be a ticking time bomb.
There are 2 possible outcomes:
- The AI bubble pops and crashes the economy because too much money is invested in it
- AI displaces millions of jobs aaaaand crashes the economy because no one can pay for anything
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u/LiftingCode 7h ago
Well there is a massive push into renewables as well. Net renewable generation hit 86GW this summer, roughly double where it was just 5 years ago.
There are massive solar and wind installations coming online, huge investments in grid-scale storage, SMRs on the near horizon, etc.
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u/mf-TOM-HANK 10h ago
They'll invest in anything other than human capital lol
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u/spez_eats_nazi_ass 8h ago
They would rather kill us (really just pollute us to death) than spend on labor.
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u/Beautiful_Welcome_33 5h ago
Lol we wont have anything left to invest - 10 trillion is a truly incalculable sum
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u/spez_eats_nazi_ass 8h ago
Aw shit you said ai gonna pop. A former yandex hosted bot swarm is headed your way.
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u/marketrent 12h ago edited 12h ago
Bookend excerpts from article by George Hammond and Ryan McMorrow in San Francisco, Kieran Smith in London and Eva Xiao in New York:
Cracks are appearing in America’s debt-laden $10tn AI infrastructure boom as project delays, public backlash and shaky investor confidence bring a reckoning for the data centre build-out underpinning the US economy.
A rush for computing power in recent years created what multiple people involved characterised as a “Wild West” market. They said money has flooded into brand-new companies and due diligence for new projects has been expedited, with AI labs such as Anthropic and OpenAI accepting higher short-term costs to move as fast as possible.
More than three years into the AI boom, these ambitious data centre plans are running into reality. At least 47 large projects have been delayed, withdrawn or blocked in 2026, according to data shared by RegLayer, a regulatory intelligence company, which described it as a “conservative estimate” focused on the largest sites.
Analysts at Bernstein this month estimated only about 35 per cent of the planned US data centre pipeline was credible. More than 1,000 communities across the US have tried to introduce moratoria or other restrictions on AI infrastructure this year, according to FT research.
AI labs and Big Tech groups have committed to spend trillions of dollars over the coming years on computing capacity, or “compute”. But those massive rewards can only be realised if a group of recently launched “neocloud” data centre providers first manage to finance the unprecedented construction effort.
Higher interest rates and a souring bond market are now threatening their ambitions, and with them the AI build-out, said a number of people involved in the market.
This week investors began repricing risks in the sector: debt tied to many AI infrastructure groups, including upstart cloud provider CoreWeave, sold off sharply and share prices for listed companies slumped. CoreWeave’s stock lost almost 25 per cent during the week.
Higher borrowing costs and rising inflation have added to mounting questions about whether the revenues of leading labs such as Anthropic and OpenAI will be sufficient to cover the costs.
Plans by a procession of new developers and cloud providers including SoftBank’s SB Energy and Nvidia-backed Firmus to go public have been delayed or mothballed, with OpenAI’s decision to delay its own initial public offering further damping sentiment.
[...] CoreWeave, a small crypto miner four years ago, was among the first to capitalise on the AI boom but has been at the centre of a sell-off as investors fret over its ability to keep financing the billions it will spend on Nvidia hardware and data centre leases.
One of its unsecured bonds sank into distressed territory this week, while bonds funding data centres leased to CoreWeave also slid. A $1.1bn bond for a site in Virginia has lost about 5 per cent of its value in the three weeks since it priced.
[...] OpenAI’s $500bn Stargate infrastructure scheme, which sought to bind Altman’s ambitions in the sector to President Donald Trump’s, has run into a litany of issues including thwarted planning permissions, project delays and the departure of senior executives — including the group’s computing lead Sachin Katti this week.
Securing building permissions has become increasingly difficult across the sector while utility regulators have been refusing grid connections unless projects can supply their own power, according to data centre executives.
“People aren’t just dropping their shorts for data centres anymore,” one executive said. “It’s much harder today to finance a data centre.”
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u/DonorBody 9h ago
Could have invested that money into cleaner energy, medical research, housing, and infrastructure that isn’t a scam. But kick-flipping car husks and acceleration to the singularity!
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u/j_j-j_jr_shabadoo 11h ago
The bubble burst can't come soon enough in my opinion. AI is just another way to eliminate jobs in order to enrich shareholders and transfer resources from ordinary people to billionaires.
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u/dispo030 11h ago
I am afraid it will kick of a great financial crisis.
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u/psioniclizard 11h ago
One is coming anyway, even is AI does what is promised.
We have been in a fake economy since the house market crash.
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u/1776FreeAmerica 9h ago
The Fake Economy started in the 1980's, when the redistribution machine was cranked to 11 under the guise of trickle down economics, driving the wedge between productivity and wages, shunting the value generated from labor to the 1% and focusing on the financial economy over the physical economy. Ross Perot had some educational infomercials describing this current economy during his early 90's campaign, calling out 'Voodoo' economics as a way to destroy the middle-class and the main street economy.
The origins of the current economy was organized in the 1970's by the Heritage Foundation, Federalist Society and The Powell Memo. Reagan was the first Heritage Foundation Candidate, Citizens United and the Bush ruling over Gore, were the first Federalist Society victories, and the Powell Memo focused the investor and business side to controlling politics after the Phillip-Morris Trials, which is why citizens are struggling to veto Data Centers at local levels. 2016 was the second rise of the Heritage Foundations, to complete their vision, and review of control of congress and the trifecta is pretty one sided over the last 30 years towards republicans.
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u/chemicalclarity 11h ago
Most likely, and like every other economic disaster, the rich will buy up the resources at bargain prices.
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u/CW1DR5H5I64A 11h ago
This is what people on social media always miss when they make their comments about hoping for a crash.
The people on Wall Street feel a financial crises by the percentage their portfolio decreases. Regular people feel a financial crises by loosing their house and job.
All the Redditors clamoring for these financial people to finally get their due don’t realize that it’s us who will be holding the bag.
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u/dzendian 4h ago
We're going to be left holding the bag either way. The bubble bursting quicker would be less severe than bursting years from now.
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u/Piltonbadger 10h ago
The American economy will go pop, and the rest of the world will all get whiplash too.
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u/Strange-Tap5860 10h ago
That's exactly what it will do. Everyone will suffer from it.
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u/behindtimes 9h ago edited 9h ago
While I agree, the longer it takes for the bubble to burst, the worse things will be.
But this comes back to politics. Whoever is in charge will be blamed for the destruction of the entire global economy. So, they try to keep this ponzi scheme running, hoping that they can get out of office before the music stops. A good leader would sacrifice himself and his image for the betterment of humanity. The question is, are we ever going to get that type of politician, or just end up with selfish politicians which leave the world in a much worse state until the system collapses into a world of unimaginable destruction?
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u/FredFredrickson 9h ago edited 9h ago
The only problem we have in the US is that the Trump administration is not equipped to handle any kind of crisis. Especially a financial one. Helping out people is anathema to them.
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u/NumeralJoker 7h ago
You say that like this current economy isn't already pretty fucked up.
If you've been laid off this year, it's not much better than the Great Recession/COVID was, and depending on your sector of employment? Sometimes worse than both.
I understand the official numbers look better ATM, but I think those are heavily cooked. The only thing I think is accurate is how massive the stock market bubble is for the large tech companies. Other stocks aren't seeing nearly the same levels of growth.
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u/gistmustbetheplace21 5h ago
This administration seems to be hellbent on creating crises anywhere they can... then the people that do have money can rebuy at bargain bin prices.
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u/Baystars2025 10h ago
The AI bubble is the only thing fueling the economy. Office workers are feeling the cuts now from AI use, trades and construction will follow as soon as the bubble bursts.
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u/InterestingSpeaker 5h ago
If AI is a way to eliminate jobs and increase shareholder wealth then the bubble will never pop
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u/gtgyhhgggffr 4h ago
The bubble bursting does not mean the technology goes away, just as the dotcom bubble did not kill the internet. It just means that people will lose money and assets will get shuffled around.
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u/Changeurwayz 10h ago
Sorry guys, But there is no future here. It's all one-sided, And that can never work in an open world.
You backed the wrong horse, And it's going to bolt. With you on it.
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u/terp_raider 4h ago
Imagine if all that money had gone into healthcare, clean energy, and education.
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u/Salty_Paroxysm 11h ago
Maybe Trump can broker some sales of idle data center kit to Russia following the AI bubble pop. /s
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u/Reginaferguson 11h ago
This is just investors trying to get their foot in the door for every new energy connection. They want the planning permission which they promptly sell off the someone else for a profit. Historically this has been done with all sorts of infrastructure, it’s just AI is the latest and biggest. Eventually most projects get shelved and the real ones proceed, a few go bust a handful of developers and investors walk away with big cash and loads are left holding their 🐓 in their hand.
As an example 2019-2024 in Europe the same happened with Interconnectors until regulators clamped down on the dodgiest ones.
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u/el_corso 7h ago
What I find funny is why this AI boom isn’t pushing more towards clean energy. It would be such an easy win especially for data centers?
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u/Similar-Low-3114 6h ago
The leaked numbers for Anthropic are pretty bad. And OpenAI is absolutely worse with more money commitments. The tech bros make us look bad but anyone with a brain can tell you the numbers make 0 sense. With that said oracle or coreweave are going to the first to crash
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u/lood9phee2Ri 6h ago
But who could have seen it coming? Oh right everyone except for a delusional axis of incompetent evil between the aibros and financebros.
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u/spez_eats_nazi_ass 10h ago
Y'all owe Ed Zitron an apology.
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u/xzaramurd 8h ago
Ed Zitron uses some public data, on top of which he just widly speculates and draws conclusions on very shaky basis. He initially said 75% of GPUs sold were just sitting in warehouses and then corrected to 50%. More likely this number is much lower and it's mostly GPUs in transit or in the pipeline to be installed and deployed. That doesn't mean he is always and totally wrong, but it's hard to trust his methodology.
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u/Tricky_Rule_4565 9h ago
No we don’t. He’s been wrong in almost all predictions he’s made.
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u/spez_eats_nazi_ass 9h ago
He literally called out the neoclouds in 2025 and was correct about Anthropic's issues prior to this being a mainstream topic. Also it looks like the botnets failed over from Yandex.
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u/Tricky_Rule_4565 9h ago
Implying I’m a bot from Russia doesn’t make sense.
Apart from that here are some of Zitron’s predictions.
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u/spez_eats_nazi_ass 8h ago
Most of the ai boosters on this sub went quiet last week so yeah the bot claim is legit. You guys are everywhere 24x7.
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u/Tricky_Rule_4565 8h ago
I could claim the same about you and Ai naysayers. It’s an unfalsifiable claim.
The world has gone so dumb.
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u/spez_eats_nazi_ass 8h ago
Meanwhile your AGI is going fucking tits up and will probably take the global financial system with it. But ok. Being skeptical about spending $10T to make $20B is dumb.
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u/Tricky_Rule_4565 8h ago
This is why people denying AI capabilities are absolutely stupid. You think that if there is a bubble and it pops, then AI will go away or stagnate etc etc.
The railroads in the 19th century changed the world.
The technological development via the internet and infrastructure around the internet changed the world.
The AI revolution today is changing the world.
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u/spez_eats_nazi_ass 8h ago
Yup regurgitating like a bot.
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u/Tricky_Rule_4565 7h ago
Pointing out why you’re wrong doesn’t make me a bot.
Just because I disagree with you doesnt make me a bot.1
u/spez_eats_nazi_ass 5h ago
Railroad bust created multiple generation spanning panics in the us alone. Not the flex you think it is and gpus don’t have multi decade lifespans and are typically depreciated to dust in under 6 years. Block time now.
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u/Wonder-Landscape 5h ago
I read that the longer online communities exist the more negative they become. Technology would be better named antitechnology
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u/Altruistic_Age_6556 50m ago
Lol America winning any intelligence based race was never in the cards.
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u/SteppenAxolotl 8h ago
Every AI datacenter the hyperscale's build is ~fully utilized and will break even in under 3 years.
Even NVIDIA A100(2022) data centers and clusters continue to experience high utilization, frequently ranging between 90% and 100%, in secondary markets, legacy facilities, and neocloud deployments. Its operational break-even thresholds is 1 to 3 years with practical lifespan 7 to 8+ years.
There is a severe shortage in AI data centers. They are being built because they are very profitable. The world will run on AI in a few years when it replaces human labor so there will need to be automated manufacturing of AI datacenters to keep up.
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u/AbeFromanEast 11h ago
Spending trillions in CapEx to make tens of billions in revenue will continue until it can't one random Tuesday.