It is more a case of investment money seeking a growing sector in a sea of shrinking sectors. Demand for AI may dry up in the medium term but investors are looking at the short term for now.
As the article says some tech firms are cash rich with a falling USD. If the dollar keeps heading down they’re basically losing money so investing in AI data centers at least shows some growth currently.
A possible fall in AI demand is down the road. They have to either keep kicking the can or give up and move to NZ bunkers.
I just want to say your comment finally made it make sense to me. I’ve been struggling to understand this trend for a long time. Thanks comrade!
Yup, I think that’s exactly what’s happening. The AI sector is seen as safe right now, and people have anxiety about the state of the economy as a whole, so they’re rushing to what they perceive to be the safe thing.
it’s not simply about demand for ai but if other sectors can keep up with the supply the ai sector needs. they depend both on an ever growing power demand which the grid wasn’t design to supply, heat dissipation which isn’t advancing enough to avoid destruction of equipment, and hardware which advances and needs constant update which means buying completely new gpus. the bubble is maintained by the promise of the advancement of the technology, if any of these fails to deliver the promise is broken and the bubble will burst.
The practicality of delivering and running data centers is not the concern of investors either. They won’t even need the projected power if they don’t get the demand. Those data centers will be idling. They haven’t even built them yet.
Investors are just thinking; "where the fuck can I put my money? The whole economy is turning to shit. " .
that’s because investment in ai is done in a circular way, nvidia gives money to openai, openai to nvidia, nvidia to softbank, openai to oracle, oracle to nvidia, etc. all of them are interrelated and the stability of each depends on the stability of the whole. of course it’s all imaginary money but it doesn’t take away the fact that if any of these fails to deliver the whole system falls apart. sure, massive data centers are not yet built, but the grid consumption is something that’s already happening, and it will be worse once they are done.
As the article said, the AI projects are in complicated financing structures. But let’s be honest, corporations have access to unlimited funds. There’s fuck-all regulations or restraints now. They get all the imaginary money. Banks are keen to lend to big corporations and they don’t care about risk or whatever. Regular Americans get zilch.
Everyone is pointing to the Jenga Tower getting wobbly but there’s no other moves in the game. People just keep adding blocks on top.
they will rent it back to us
Actually Existing Overcapacity
