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What'll happen if we spend nearly $3T on data centres no one needs?
- rwmj 1y agohttps://archive.ph/hikr0 https://archive.ph/hikr0
- quantified 1y agoNet net: Morgan Stanley is all excited about its role in financing the buildout. But dimissive of the idea that the efforts might not be generate enough revenue to pay for the centers, and stepping around the current lack of power for them. If they arrange financing but don't hold the loans themselves, they get paid without assuming any risk, yes?
- papercrane 1y ago> If they arrange financing but don't hold the loans themselves, they get paid without assuming any risk, yes? Yes, that's correct. It's typically how investment banks operate, their main business is facilitating transactions. They'll turn around and sell the loans to hedge funds and private investors. This obviously mean they have incentive to encourage buildouts and to downplay the risks of the loans.
- deleted 1y ago[deleted]
- 1vuio0pswjnm7 1y agoWorks if/when archive.ph is blocked No Javascript required x=https://www.ft.com/content/7052c560-4f31-4f45-bed0-cbc84453b3ce echo url=$x|curl -K/dev/stdin -A "Mozilla/5.0 (Java) outbrain" > 1.htm firefox ./1.htm
- tomrod 1y agoOh dang. They have really gone all in with "This time is different!"
- LPisGood 1y agoThat’s not necessarily a counter argument though; some times are different.
- tomrod 1y agoWhich?
- LPisGood 1y agoThe printing press, for example.
- tomrod 1y agoI don't follow.
- LPisGood 1y agoThe printing press was a time when a technology was different than everything that came before it, completely ushering in a new era inconceivable to people from the past era.
- tomrod 1y agoAh. I see your confusion. I was referencing the phrase in terms of financial markets and irrational exuberance, not technology phase shifts. We had books before and after the printing press adoption, just now we could produce more with lower quality materials. The areas that blockchain-cum-AI grifters think they will succeed in is art, which is deliciously ironic, and thoughtful work. The areas current AI achieves value are the margins that few enjoy, like filler emails and blockbuster movies that few go to theaters to see, compliance checklists, boilerplate code, and repetitive low value work flows. Still, it will be interesting to see where else we can build margins. Alphafold is a great example of where GenAI can do well.
- ReptileMan 1y agoWe will play crysis on 1080p finally
- cwbrandsma 1y agoAI is somehow supposed to generate $1T a year by 2028? From where? Never mind the lack of electric grid capacity to keep all of this running.
- 0x20cowboy 1y agoIf nobody has a job, I am unsure who will be left to pay the subscription fee.
- imglorp 1y agoThe other way around maybe? They think the employers are going to line up to pay billions for AI workers in order to avoid paying trillions in benefits to human ones?
- api 1y agoWho buys the products then?
- ares623 1y agoWho will be the customers for those employers?
- frfl 1y agoAnd who will buy the products and serivces of these "employers" when nobody has a job? See you can keep adding middle layers, but eventually you'll find there's no one with any money at the bottom of this pyramid to prop this whole thing up. When the consumer driven economy has no critical mass of consumers, the whole model kinda goes belly up, no?
- tharmas 1y agoPerhaps a feudal economy where it is just the wealthy who consume. The rest of humanity is pure subsistence.
- jvanderbot 1y ago
- Spivak 1y agoI'll be more than happy to buy the equipment at the liquidation sale. Won't let it go to waste, the homelab must grow.
- ieie3366 1y agoThe amount of datacenter-grade GPUs on Ebay will be insane in 15 years
- Mengkudulangsat 1y agoWhat can you do with lots and lots redundant climate-controled buildings? Indoor strawberry farms.
- izzydata 1y agoUnless something fundamentally changes I don't see myself ever spending a single dollar on LLMs. If this whole endeavor somehow becomes profitable it will be a miracle.
- m-hodges 1y agoA lot of people don’t spend a single dollar on Instagram either.
- Chronoyes 1y agoMe too! Except I wondered why my non-tech wife had stopped complaining about ChatGPT limits, and it turns out she has quietly been subscribing to Pro plan. It's happening.
- bombcar 1y agoThe biggest takeaway from LLMs may be finally figuring out how to monetize search.
- throwawaylaptop 1y agoI have used both free and paid Google Gemini. I'm as cheap as can be. Im back to the free because it's good enough, and presumably getting better. If they took away the free, I'd pay $20 and be thankful they kept it at $20. I love doing things myself.. I mow my lawn, change my oil, change my water heater, and try to never use frameworks or libraries. But not using LLMs seems insane. If they weren't free, you wouldn't use them?
- jdlshore 1y agoThe majority of the time I’ve used an LLM, it’s failed to do the task properly. The times that it worked are the times that a bit of Googling would have solved. I’m not OP, but I’m not at the point where I would spend money on an LLM either.
- throwawaylaptop 1y ago
- gruez 1y agoIt'll get used eventually. Just like the fiber optic cables built during the dotcom bubble. https://en.wikipedia.org/wiki/Dot-com_bubble#Bubble_in_telecom https://en.wikipedia.org/wiki/Dot-com_bubble#Bubble_in_telec...
- TMWNN 1y agoInternet traffic kept growing throughout the dotcom bubble. That valuations got ahead of themselves didn't mean that there wasn't something real driving the hype.
- deleted 1y ago[deleted]
- ojbyrne 1y agoDoes fiber optic cable become obsolete? I don't really know. But I know servers do.
- khuey 1y agoFiber optic cable actually got better over time because multiplexing continued to improve. You could take dark fiber laid in the late 90s and put new transceivers at the ends and get much more bandwidth than anyone expected when the cable was laid.
- bashtoni 1y agoThere were many companies in the mid 2000s that were viable only because they bought networks at a fraction of the cost spent to build them.
- gscott 1y agoManhattan sized data center sells to OnlyFans at half-price
- mathiaspoint 1y ago
- tptacek 1y agoHosting will get a lot cheaper.
- deadbabe 1y agoThe question is ridiculous. These data centers will certainly be used.
- kwertyoowiyop 1y agoBitcoin mining?
- jiggawatts 1y agoFundamentally, there is no ceiling on the utility of "compute". There will always be some use for it, the current crop of AIs is just the first practical scalable one for this flavour of large-scale GPU clusters. If chatbots turn out to be pointless for anything other than translation, copy-editing, and developer assistance, then we can still use the GPUs for robotics. I.e.: Farmers could have robots in the fields with cameras and arms for picking fruit, but outsource the machine vision and motion-control tasks to a data centre. It makes a lot more sense than lugging around batteries and GPUs literally "in the field" with the mud, heat, humidity, and vibration! PS: As far back as the early 1990s I remember reading articles about "nobody needs 'X' upgrade", which was invalidated immediately, every time. I now have more computer power in my pocket than my first six or seven computers combined. I "found a use" for that "absurd" computer power. Not to mention that 5G to my own personal phone has bandwidth exceeding the country's entire international telecommunications bandwidth in 1990!
- jncfhnb 1y agoThen it looks like China and their egregious over investment in things
- mathiaspoint 1y agoThe GPU shortage will suddenly be solved at least.
- King-Aaron 1y agoA lot of people are viewing this through the lens of LLM/AI technology being used to do consumer facing things, and are wondering where the cost/benefit is. But this technology race feels like the Manhattan project, and should be viewed through the lens of a technology that will be used to fight the next war. That's why limitless resources are being thrown at it. He who controls the spice etc.
- pyrale 1y agoAssuming 10 billion humans all using the tech, and 10 year amortizing, and zero operating cost, that requires $30 per user. Not sure if that number acounts for interests either. Yeah, the author could have used "when" instead of "if". The most realistic success scenario would be rampant inflation eating the debt.
- keeda 1y agoIf you look at all the hyperscalers' earnings reports, they all report their data centers being capacity constrained, especially for GPUs. Then couple this with survey-based reports [1, 2] showing that so far a minority of people used AI regularly for work, and that too for a fraction of their workdays. This indicates huge demand with even bigger potential for growth. This is why there is this huge gold rush for infrastructure, why these players have such sky-high valuations and why investors are scambling to pour in even more money. The focus on AGI and ASI is a distraction and only relevant to the frontier model labs (more on them later). Even if AGI/ASI is never achieved and all model development was frozen today, we have decades of growth ahead of us. The only risk is that all these productivity gains are a mirage (cue that METR paper) and at some point people will realize it and the whole scheme will come tumbling down. However, studies like [1] contradict that premise and are already finding productivity gains that match various other RCT-based studies: >This implies that each hour spent using genAI increases the worker’s productivity for that hour by 33%. This is similar in magnitude to the average productivity gain of 27% from several randomized experiments of genAI usage (Cui et al., 2024; Dell’Acqua et al., 2023; Noy and Zhang, 2023; Peng et al., 2023) Our estimated aggregate productivity gain from genAI (1.1%) exceeds the 0.7% estimate by Acemoglu (2024) based on a similar framework. (Not to mention my own anecdotal experiences and the rising frequency of people posting about their successes with tools like Claude Code on HN and other social media.) To me there is virtually no risk that this data center capacity will be unused. There probably is a bubble, but only as far as the frontier labs are concerned; given that models costing millions to train still get commoditized rapidly, it is not clear if they can capture the value produced by their models to sustain their valuations. But those models require infra to run and that's exactly what the hyperscalers are stockpiling. The frontier labs will need to get in on that game to survive long term. [1] https://www.stlouisfed.org/on-the-economy/2024/sep/rapid-adoption-generative-ai https://www.stlouisfed.org/on-the-economy/2024/sep/rapid-ado... (full paper: https://s3.amazonaws.com/real.stlouisfed.org/wp/2024/2024-027.pdf https://s3.amazonaws.com/real.stlouisfed.org/wp/2024/2024-02...) [2] https://arstechnica.com/ai/2025/07/so-far-only-one-third-of-americans-have-ever-used-ai-for-work/ https://arstechnica.com/ai/2025/07/so-far-only-one-third-of-...
- joak 1y agoI was surprised that in the energy solutions to power the data centers the FT journalist just proposes nuclear and gas but not the obvious photovoltaics + storage.
- tmaly 1y agoGiven that datacenter capex spending is the US economy at the moment, a better question will be, what will replace data center spending when we stop building?
- lif 1y agounpopular take here, no doubt: arguably, 'need' might not be the best verb for what motivates the extremely short-sighted 'make number go up' race (try instead a noun that rhymes)
- hulitu 1y ago> What'll happen if we spend nearly $3T on data centres no one needs? Imagine a Beowulf cluster of those. /s Now seroiusly, why not give them to people who need them (shared access) ? I know, i know: profit, capitalism.