Early Signs Of An AI Data Center Slowdown & Probable Crash
A few weeks ago Microsoft's CEO warned that much of the AI enthusiasm amounted to hype. Moreover, he is skeptical about general artificial intelligence. He has a point. Microsoft invested $12 billion in OpenAI, but has seen little revenue from integrating its models into the AI Azure services offered on its Cloud platform. In addition, Microsoft has abandoned several site options (lease or land purchase) for new data centers. Just a coincidence? Probably not. Total global AI data center infrastructure spending planned and announced easily exceeds a trillion dollars. Yet Cloud revenues are slowing across providers, not accelerating. AWS has gone from 30% to 40% annual growth down to 10% to 20% in recent years. A similar slowdown has hit Microsoft. Yet at the same time as global revenues are slowing, AI capex has ramped up. There is a great likelihood that the result is a crash with abandoned assets and cancelled projects. Demand is not materializing plus there is a severe shortage o...