I have been writing all year about the unbelievable size of the AI builtout in terms of spending and corporate capex. This is a great chart to put it into perspective and note that he dates are much more compressed than anything previously.<\/p>\n
What still puzzles me is exactly where all the money is going.<\/p>\n
This isn’t a buildout like railroads where you need steel mills and enormous amounts of workers. Instead, estimates on some data centers are that 80% of the costs will go straight to Nvidia with a good portion of the rest going to rack components and whatnot. The actual building part — the part that distills into the economy — might be 5% or less of the spending.<\/p>\n
That makes me skeptical that some of the historical multiples apply.<\/p>\n
On the other hand, these are tremendously energy intensive operations and the building of power generation is a classic broadly-dispersed exense that will flow through factories and raw materials. Some of the numbers around the power generation are truly mind-blowing and what scares me is that I don’t think there is the capacity for it to keep up with data center demand.<\/p>\n
This is from ZeroHedge:<\/p>\n
How mathematically impossible is the energy math behind the data center rollout? Just Texas alone is facing 474GW of interconnection requests (ERCOT), of which 90% is data centers. Which is why gov Abbott froze rollout of new data centers in Texas. <\/p>\n
For context, ERCOT all-time peak demand record is 91.1GW on July 22, 2026, with normal demand between 40 and 80GW.<\/p>\n
Of course, that’s peak. In a more realistic scenario, Morgan Stanley sees the entire US short about 80-100GW through 2030, or a deficit of about 100 nuclear power plants.<\/p>\n
That sounds like a big problem and there is a very real scenario that if these data centers actually get built on time, they won’t be allowed to connect to the grid for years.<\/p>\n","protected":false},"excerpt":{"rendered":"I have been writing all year about the unbelievable size of the AI builtout in terms of spending…\n","protected":false},"author":2,"featured_media":857176,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,276,277,49,48,61],"class_list":["post-857175","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-ca","tag-canada","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/857175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=857175"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/857175\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/857176"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=857175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=857175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=857175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}