The everything bubble?

Markets are struggling as data centers, particularly in Oregon, are left idle due to a power grid connection issue, resulting in costly GPUs sitting unused. Microsoft CEO Satya Nadella highlighted this challenge, stating that the lack of available data center infrastructure is the primary roadblock in AI development. Despite increased spending on data centers and a growing construction pipeline, the infrastructure is lagging behind operational needs. Veteran investor Paul Kedrosky warns this scenario consolidates the elements of prior bubbles, suggesting a looming crisis as the power shortage could lead to unnecessary investments in power plants, ultimately creating stranded assets. The risk of over-investment is exacerbated by a lack of demand forecasting in the quickly evolving AI sector. Current sentiment reflects the lowest consumer confidence since 1960, even as data shows that investor returns historically thrive amid such bearishness. Concerns about electricity price increases due to data centers have thus far been unfounded, and with the U.S. leading in data center numbers, the unfolding situation suggests we may be witnessing another bubble in asset markets.

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