Ambrose Evans Pritchard thinks the markets, lifted by AI mania, are about to crash into a series of simple constraints. We simply don’t have the electrical equipment and electricians.
We are nearing the same point today with AI, although this time for a different and overwhelming reason. The $20tn (£15tn) valuation of hyperscalers, chipmakers and the larger AI complex, has wildly outpaced the electrical infrastructure needed to run data centres and sustain the technology on anything like the projected scale.
The physical constraint is rock hard. “Our grid in the United States hasn’t had any meaningful upgrade since the 1970s,” said Bobby Majumder from the industrial law firm FBT Gibbons.
The threat to AI stock mania is not so much lack of energy — though that is serious — but rather the global bottleneck of transformers, substations, switchgear, transmission lines and all the unsexy stuff we rarely think about, leaving aside the acute shortage of skilled workers in the US able to install and run such kit.
I’m a little skeptical about this. Other parts of the American economy, including the industrial economy, seem to be coming online vigorously.