What'll happen if we spend nearly $3T on data centres no one needs?

https://www.ft.com/content/7052c560-4f31-4f45-bed0-cbc84453b3ce

by rwmj • 12 months ago

42 91 12 months ago

rwmj• 12 months ago

quantified• 12 months ago

Net 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• 12 months 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.

1vuio0pswjnm7• 12 months ago

Works 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

tomrod4• 12 months ago

Oh dang. They have really gone all in with "This time is different!"

LPisGood4• 12 months ago

That’s not necessarily a counter argument though; some times are different.

tomrod4• 12 months ago

Which?

ReptileMan• 12 months ago

We will play crysis on 1080p finally

cwbrandsma• 12 months ago

AI 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• 12 months ago

If nobody has a job, I am unsure who will be left to pay the subscription fee.

imglorp• 12 months ago

The 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?

jvanderbot• 12 months ago

5 million claude agents? Oh wait that's a billion. Yeah it's not happening.

twothreeone2• 12 months ago

OpenAI's ChatGPT alone hit 500 million weekly active users in March, apparently they're closer to 800 million now. I guess they're still working out the monetization strategy, but in the worst case just think of how Google makes their revenue off search..

LPisGood4• 12 months ago

Each ChatGPT query costs orders of magnitude more than a google search. I can’t say for sure how many orders, but I suspect more than a few.

ares6232• 12 months ago

I'm curious why they only publish weekly active users. Isn't it usually monthly active users?

stogot• 12 months ago

Say: 3 billion users, 20% xconvert to customers (600M) paying 20mo, is a combined 144B. Nowhere near a 1T reality

fcpguru• 12 months ago

In the recent Sam Altman interview he said the plan should be keep burning fossil fuels to power the data centers running AI because that’s the path to fusion. Just like LLM can help devs code 100x faster they can do that for nuclear engineers too.

dashundchen• 12 months ago

Sounds like he is sucking up to the Dear Leader and his sponsors again.

belter• 12 months ago

You statement could be seen as sarcastic...or not...and in itself that is tragic...

eddythompson80• 12 months ago

Fusion seems short-sighted though. Antimatter is 100% efficient. I personally think Sam Altman should be looking into something like an Infinite Improbability Drive as it would would be a better fit here.

jncfhnb2• 12 months ago

Maybe if we put them in some sort of four armed exoskeleton

Spivak• 12 months ago

I'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• 12 months ago

The amount of datacenter-grade GPUs on Ebay will be insane in 15 years

izzydata3• 12 months ago

Unless 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• 12 months ago

A lot of people don’t spend a single dollar on Instagram either.

Chronoyes• 12 months ago

Me 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• 12 months ago

The biggest takeaway from LLMs may be finally figuring out how to monetize search.

throwawaylaptop3• 12 months ago

I 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?

jdlshore2• 12 months ago

The 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.

merek• 12 months ago

Our chats might soon look something like this

Human: Provide some weight loss tips

AI: I'll get right on it! But before I do, have you had dinner yet? KFC's new finger-licking MEGA feast will bust your hunger for only $19.95. Click here to order.

alansammarone• 12 months ago

I really don't mean this in any negative way, but I find it fascinating the wide range of opinions and attitudes in this matter. I find it _so_ hard to imagine having this view myself.

The amount of things I've learned by asking very specific, technical questions to ChatGPT (mostly with web search turned on, but some times it's not even necessary) - things I can immediately verify and/or use, such as small bash commands/scripts, visualizations, diagrams. The value of that, alone, is certainly in the hundreds of dollars per month. Things I would never learn because they are buried somewhere among the 30 answers/comments, sometimes pointing to 20 more terribly-hard-to-read pages or manuals riddled with irrelevant (for my question) content, somewhere in the first page of web search results... maybe it's an attention span question? I certainly won't spend more than 10 minutes reading anything if not's interesting or required in the most extreme sense of the word way for my job (books on quantum mechanics, general relativity, topology, all fall in the former category - bash and pandas documentation fall in neither).

I'm convinced I've saved _at least_ low thousands per week by using coding assistants (mostly Claude Code in my case, but that's personal and likely to change at some point), as evidenced by the amount of work I'm able to finish, get paid for, and maintain. I'm not vibe coding, mind you - most of the time, I have an almost complete mental model of what I want after a couple of hours thinking, and the only thing left to do is type the code, at which point I'd, previously, feel bored, since the fun part (the thinking) is over.

Edit: I have 20 years of experience with code, 15 in the industry as a SWE (been coding since I was 13)

93po• 12 months ago

I find it's either people being flippantly dismissive because it's something they've decided to make part of their personality and refuse to consume any information that may challenge their opinion, or they just massively lack imagination and creativity both on what it can do but also what it could do in 1, 5, or 20 years.

mathiaspoint5• 12 months ago

I think the issue is that local LLMs are improving so fast even if the free hosted ones disappeared today most people probably wouldn't pay.

izzydata3• 12 months ago

I have had no trouble finding solutions to coding problems by normal searches very quickly. The solution is typically right there in API documentation or one of the first few results.

But I suppose that answers how they may make LLMs profitable. They could cripple or even eliminate normal search until paying for LLMs is the only option.

thunderbong• 12 months ago

I don't think these huge data centers are going to rely on individual users using them

lif2• 12 months ago

perhaps by the slippery slope/funnel of free convenience -> paid 'necessity'?

gruez2• 12 months ago

It'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_telec...

TMWNN• 12 months ago

Internet 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.

ojbyrne• 12 months ago

Does fiber optic cable become obsolete? I don't really know. But I know servers do.

khuey• 12 months ago

Fiber 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• 12 months ago

There 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• 12 months ago

Manhattan sized data center sells to OnlyFans at half-price

do_not_redeem• 12 months ago

Sounds like a redistribution of wealth from VC-backed companies, to viable businesses. I'm okay with that.

jboggan• 12 months ago

Just like the Purple Hearts made for the invasion of Japan

https://www.historynewsnetwork.org/article/75-years-later-pu...

Mengkudulangsat• 12 months ago

What can you do with lots and lots redundant climate-controled buildings?

Indoor strawberry farms.

tptacek• 12 months ago

Hosting will get a lot cheaper.

deadbabe• 12 months ago

The question is ridiculous. These data centers will certainly be used.

kwertyoowiyop• 12 months ago

Bitcoin mining?

jiggawatts• 12 months ago

Fundamentally, 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!

jncfhnb2• 12 months ago

Then it looks like China and their egregious over investment in things

mathiaspoint5• 12 months ago

The GPU shortage will suddenly be solved at least.

King-Aaron• 12 months ago

A 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• 12 months ago

Assuming 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• 12 months ago

If 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-ado... (full paper: https://s3.amazonaws.com/real.stlouisfed.org/wp/2024/2024-02...)

[2] https://arstechnica.com/ai/2025/07/so-far-only-one-third-of-...

joak• 12 months ago

I 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• 12 months ago

Given 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?

lif2• 12 months ago

unpopular 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• 12 months 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.

What'll happen if we spend nearly $3T on data centres no one needs?

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