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This seems like a total category error. The Railroads are the only example that actually seems comparable, in being an infrastructure build out that's mostly do

This seems like a total category error. The Railroads are the only example that actually seems comparable, in being an infrastructure build out that's mostly done by a variety of private companies. Examples of things that would be worth comparing to the datacenter boom are factory construction and utilities (electrification in the first half of the 20th century, running water, gas pipes.)

stefan_ 6mo ago
"Infrastructure build out"? Everything put into these datacenters is worthless well before 10 years have gone by. We aren't even getting infrastructure out of it, they are just powering it with gas turbines..
- jeffbee 6mo ago
  This isn't true and you can easily prove it to yourself by renting a Sandy Bridge CPU or a TPUv2 from Google today.
jeffbee 6mo ago
The other categorical error is that the American people paid the railroads a monumental subsidy to get the job done. We gave them almost 10% of the territory.
- lenerdenator 6mo ago
  Given the size of some of these data centers, the incentives packages that local governments often give their developers, and the impact on the electric grid that can, in some cases, raise costs for other ratepayers, I'd say the comparison could be similar. The one Google's putting in KC North is 500 acres [0] and there were $10 billion in taxable revenue bonds put up by the Port Authority to help with the cost. This for a company that could pay for that in cash right now. [0] https://fox4kc.com/news/google-confirms-its-behind-new-data-center-coming-to-northland/ https://fox4kc.com/news/google-confirms-its-behind-new-data-...
  - jeffbee 6mo ago
    That's the opposite of a subsidy. KC stakes nothing of value and gets a defined revenue for the next 25 years.
    - lenerdenator 6mo ago
      Then why would Google mess with the bonds at all? Again, they have the cash to buy that land and develop it without any further consideration beyond permits and planning.
      - jeffbee 6mo ago
        They lock in things like tax rates and insulate their investment against political risks for the duration of its economic life.
        lenerdenator 6mo ago
        So they're doing something most of us can't do at the expense of the budget of the local government should the tax rates need to rise. Wonderful. I'm so happy this is happening in my community.
therobots927 6mo ago
The problem is that once built, railroads provided economic value right off the bat. I would love to hear about the economic value being generated by these LLMs. I think a couple years is enough time for us to start putting some actual numbers to the value provided.
- lukeschlather 6mo ago
  Equating this buildout with LLMs is also a category error. Waymo (self-driving cars) depends on the same infrastructure, and there are a variety of other robotics programs which are actually functioning, you can see them in operation. They all require a lot of GPUs to train and run the models which operate the robotics.
  - therobots927 6mo ago
    What % of GPUs are running self driving software or robotics? And what is the ROI on either of those right now?
    - lukeschlather 6mo ago
      The answers to both of those questions are pretty guarded trade secrets. Amazon and Google just to name a couple examples are very profitable companies and I would not bet on them investing all this money without real use cases where profit is likely. Amazon is adding thousands of new robots to their factories every year.
      - therobots927 6mo ago
        So your argument basically boils down to, the datacenter build out is not a waste of resources because if it was, these companies wouldn’t be building them. Got it.
        lukeschlather 6mo ago
        I mean, your argument is that Google has had increasing revenue and profit for a decade, to the point that they have $400B in revenue + profit this year, and that they are going to lose money because they plan to spend $180B on capital projects for new data centers next year, because you know their business better than they do.
0xbadcafebee 6mo ago
Fwiw, Railroads were the reason for some of the biggest bank collapses in history. Panic of 1873 was literally called "The Great Depression" (until a greater depression hit). 20 years later was the Panic of 1893. Both were due to over-investment and a bubble bursting, and they took out tons of banks and businesses. We're seeing exactly the same thing with AI, as there is massive investment creating a bubble without a payoff. We know that the value will lower over time due to how software and hardware both gets more efficient and cheaper. And so far there's no evidence that all this investment has generated more profit for the users of AI. It's just a matter of time until people realize and the bubble bursts. And when the bubble does burst, what's going to happen? Most of the investment is from private capital, not banks. We don't know where all that private capital is coming from, so we don't know what the externalities will be when it bursts. (As just one possibility: if it takes out the balance sheets of hyperscalers and tech unicorns, and they collapse, who's standing on top of them that collapses next? About half the S&P 500 - so 30% of US households' wealth - but also every business built on top of those mega-corps, and all the people they employ) Since it's not banks failing, they probably won't be bailed out, so the fallout will be immediate and uncushioned.
- keeda 6mo ago
  > We're seeing exactly the same thing with AI, as there is massive investment creating a bubble without a payoff. ... And so far there's no evidence that all this investment has generated more profit for the users of AI. If you look around a bit, you will find evidence for both. Recent data finds pretty high success in GenAI adoption even as "formal ROI measurement" -- i.e. not based on "vibes" -- becomes common: https://knowledge.wharton.upenn.edu/special-report/2025-ai-adoption-report/ https://knowledge.wharton.upenn.edu/special-report/2025-ai-a... (tl;dr: about 75% report positive RoI.) The trustworthiness, salience and nuances of this report is worth discussing, but unfortunately reports like this gets no airtime in the HN and the media echo chamber. Preliminary evidence, but given this weird, entirely unprecedented technology is about 3+ years old and people are still figuring it out (something that report calls out) this is significant.
  - 0xbadcafebee 6mo ago
wisemanwillhear 6mo ago
For some reason this reminds me of people at work who walk up and say we did x bazillion things in n time, and then pause and expect us to express shock at how amazing that is and how much more productive they are than other teams. So what. Without a proper comparison to something equivalent I can't evaluate whether it's exceptional. I could treat each molecule as a thing and tell people how incredibly many things I eat on average per minute, but if I explain no one would find this to be exceptional.
- ZeWaka 6mo ago
  50 story points!!!
  - KylerAce 6mo ago
    The only thing that matters
- nullhole 6mo ago
  "Rice is great if you're really hungry and want to eat two thousand of something" - Mitch Hedberg
  - contingencies 6mo ago
    Also, if you have huge amounts of fresh water and a tropical climate... you can get three harvests per year. Unlike most staple crops.
negura 6mo ago
regardless, it's true that AI-related spending is the largest mobilization of capital in history
- Danox 6mo ago
  And it’s probably useless at the end of the day because everything will reduce down from a centralized location to your desktop/laptop/tablet/phone. OpenAI, Microsoft, Meta, Google, Oracle dreams of a centralized computing location will not hold up.

stefan_ 6mo ago

"Infrastructure build out"? Everything put into these datacenters is worthless well before 10 years have gone by. We aren't even getting infrastructure out of it, they are just powering it with gas turbines..

jeffbee 6mo ago
This isn't true and you can easily prove it to yourself by renting a Sandy Bridge CPU or a TPUv2 from Google today.

jeffbee 6mo ago

The other categorical error is that the American people paid the railroads a monumental subsidy to get the job done. We gave them almost 10% of the territory.

lenerdenator 6mo ago
Given the size of some of these data centers, the incentives packages that local governments often give their developers, and the impact on the electric grid that can, in some cases, raise costs for other ratepayers, I'd say the comparison could be similar. The one Google's putting in KC North is 500 acres [0] and there were $10 billion in taxable revenue bonds put up by the Port Authority to help with the cost. This for a company that could pay for that in cash right now. [0] https://fox4kc.com/news/google-confirms-its-behind-new-data-center-coming-to-northland/ https://fox4kc.com/news/google-confirms-its-behind-new-data-...
- jeffbee 6mo ago
  That's the opposite of a subsidy. KC stakes nothing of value and gets a defined revenue for the next 25 years.
  - lenerdenator 6mo ago
    Then why would Google mess with the bonds at all? Again, they have the cash to buy that land and develop it without any further consideration beyond permits and planning.
    - jeffbee 6mo ago
      They lock in things like tax rates and insulate their investment against political risks for the duration of its economic life.
      - lenerdenator 6mo ago
        So they're doing something most of us can't do at the expense of the budget of the local government should the tax rates need to rise. Wonderful. I'm so happy this is happening in my community.

therobots927 6mo ago

The problem is that once built, railroads provided economic value right off the bat. I would love to hear about the economic value being generated by these LLMs. I think a couple years is enough time for us to start putting some actual numbers to the value provided.

lukeschlather 6mo ago
Equating this buildout with LLMs is also a category error. Waymo (self-driving cars) depends on the same infrastructure, and there are a variety of other robotics programs which are actually functioning, you can see them in operation. They all require a lot of GPUs to train and run the models which operate the robotics.
- therobots927 6mo ago
  What % of GPUs are running self driving software or robotics? And what is the ROI on either of those right now?
  - lukeschlather 6mo ago
    The answers to both of those questions are pretty guarded trade secrets. Amazon and Google just to name a couple examples are very profitable companies and I would not bet on them investing all this money without real use cases where profit is likely. Amazon is adding thousands of new robots to their factories every year.
    - therobots927 6mo ago
      So your argument basically boils down to, the datacenter build out is not a waste of resources because if it was, these companies wouldn’t be building them. Got it.
      - lukeschlather 6mo ago
        I mean, your argument is that Google has had increasing revenue and profit for a decade, to the point that they have $400B in revenue + profit this year, and that they are going to lose money because they plan to spend $180B on capital projects for new data centers next year, because you know their business better than they do.

0xbadcafebee 6mo ago

Fwiw, Railroads were the reason for some of the biggest bank collapses in history. Panic of 1873 was literally called "The Great Depression" (until a greater depression hit). 20 years later was the Panic of 1893. Both were due to over-investment and a bubble bursting, and they took out tons of banks and businesses. We're seeing exactly the same thing with AI, as there is massive investment creating a bubble without a payoff. We know that the value will lower over time due to how software and hardware both gets more efficient and cheaper. And so far there's no evidence that all this investment has generated more profit for the users of AI. It's just a matter of time until people realize and the bubble bursts. And when the bubble does burst, what's going to happen? Most of the investment is from private capital, not banks. We don't know where all that private capital is coming from, so we don't know what the externalities will be when it bursts. (As just one possibility: if it takes out the balance sheets of hyperscalers and tech unicorns, and they collapse, who's standing on top of them that collapses next? About half the S&P 500 - so 30% of US households' wealth - but also every business built on top of those mega-corps, and all the people they employ) Since it's not banks failing, they probably won't be bailed out, so the fallout will be immediate and uncushioned.

keeda 6mo ago
> We're seeing exactly the same thing with AI, as there is massive investment creating a bubble without a payoff. ... And so far there's no evidence that all this investment has generated more profit for the users of AI. If you look around a bit, you will find evidence for both. Recent data finds pretty high success in GenAI adoption even as "formal ROI measurement" -- i.e. not based on "vibes" -- becomes common: https://knowledge.wharton.upenn.edu/special-report/2025-ai-adoption-report/ https://knowledge.wharton.upenn.edu/special-report/2025-ai-a... (tl;dr: about 75% report positive RoI.) The trustworthiness, salience and nuances of this report is worth discussing, but unfortunately reports like this gets no airtime in the HN and the media echo chamber. Preliminary evidence, but given this weird, entirely unprecedented technology is about 3+ years old and people are still figuring it out (something that report calls out) this is significant.
- 0xbadcafebee 6mo ago

wisemanwillhear 6mo ago

For some reason this reminds me of people at work who walk up and say we did x bazillion things in n time, and then pause and expect us to express shock at how amazing that is and how much more productive they are than other teams. So what. Without a proper comparison to something equivalent I can't evaluate whether it's exceptional. I could treat each molecule as a thing and tell people how incredibly many things I eat on average per minute, but if I explain no one would find this to be exceptional.

ZeWaka 6mo ago
50 story points!!!
- KylerAce 6mo ago
  The only thing that matters
nullhole 6mo ago
"Rice is great if you're really hungry and want to eat two thousand of something" - Mitch Hedberg
- contingencies 6mo ago
  Also, if you have huge amounts of fresh water and a tropical climate... you can get three harvests per year. Unlike most staple crops.

negura 6mo ago

regardless, it's true that AI-related spending is the largest mobilization of capital in history

Danox 6mo ago
And it’s probably useless at the end of the day because everything will reduce down from a centralized location to your desktop/laptop/tablet/phone. OpenAI, Microsoft, Meta, Google, Oracle dreams of a centralized computing location will not hold up.