The global landscape is being remade by the AI boom, with 11,000 datacenters now operating globally—a 500% increase over the past 20 years. And more are coming. A projected $3 trillion spend by 2028 is funding a massive new wave of construction, but experts are questioning if this “exuberance” is sustainable.
The pace is “incredible.” This year alone, 7GW of new capacity will be completed, and work will start on 10GW more. Goldman Sachs expects total global capacity (currently 59GW) to double by 2030. This expansion is driving tech valuations to historic highs, with Nvidia hitting $5tn and Google’s parent reporting a $100bn quarter.
But this massive build-out is also raising red flags. Alibaba’s chair, Joe Tsai, warned of a “bubble,” pointing to “speculative” projects raising funds without any customer commitments. The Uptime Institute, which rates datacenters, confirmed this, stating “many” of the announced projects “will never be built.”
Fueling this speculative fire is a $1.5tn funding gap being filled by private credit. Analysts warn these “shadow bank” lenders are misjudging the risks of funding “quickly depreciating assets.” This is especially concerning as an MIT study found 95% of corporate AI pilots are currently yielding zero returns.
While tech giants like Microsoft are building “general purpose” facilities, the market is rife with “all-in on AI” projects. The $3tn question is how many of these 11,000+ datacenters will be profitable, and how many will be the empty shells of a burst bubble.