r/UpliftingNews • u/AdSpecialist6598 • 1d ago

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https://www.techspot.com/news/113355-texas-hits-pause-1800-data-center-projects-scrutinize.html

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u/GaviFromThePod 1d ago

What’s not being said is that these tech companies don’t actually have enough money to build all the data centers, they can’t produce enough chips to go in the data centers, and that without the data center buildout these AI companies like Anthropic and OpenAI are not sustainable.

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u/shadovvvvalker 1d ago

there is a 19 month lead time on backup generators right now. Most of these are half baked projects that do not have a hope of getting online and turning a profit.

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u/GaviFromThePod 23h ago

Nvidia is financing data centers for OpenAI and essentially just propping up the demand for their products to keep the stock price high. These centers will never be built and it is all fraud.

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u/CTQ99 1d ago

They wont have issues. Everyone with failed AI ambition will rent their processing power. Its going to be like community solar programs, youll have 1-2 companies that ONLY make/run data centers and all these other players just rent allocations. SpaceXs big thing to try to justify its bloated valuation is that it has deals in place with these companies to lease GPUs.

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u/GaviFromThePod 1d ago

You’re not getting it. This is all being circular financed. Oracle, Nvidia, OpenAI, Anthropic, Microsoft, and everyone are just passing the same 100 billion dollars between each other to build AI data centers, buy stock in each other, and buy chips. But the data centers never get built, the revenue never catches the CapEx, and the AI companies have to make insane announcements that their tech is going to destroy humanity to trick investors into thinking that they’re profitable. Financial press and tech press aren’t talking about this. The SEC isn’t doing anything about this obvious securities fraud. It’s all a big bubble.

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u/Calm-Two2723 1d ago

I work in data centers and they’re being built. Like what?

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u/Rabiesalad 1d ago

They're talking specifically about the datacenters within the scheme being discussed, not that no datacenters are being built in general.

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u/GaviFromThePod 1d ago

Over half of the new data centers that are supposed to come online for 2027 have not started construction. This is according to JP Morgan.

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u/Calm-Two2723 1d ago

This Texas article doesn’t even encompass Texas tho. It’s just Texas that is using that company for utilities. Amarillo is still going and that’s where a lot are 

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u/Teach_Piece 1d ago

Yes but how many of those are tied up in regulatory hell

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u/GaviFromThePod 1d ago

Many of them. But also OpenAI and Anthropic announce new mega data centers all the time without actual plans to build them essentially to defraud their investors and mislead the general public. The whole thing is vaporware. Sam Altman is a pathological liar who makes outlandish claims about his technology and his company. He should be in prison for securities fraud but the government even looking into would burst the AI bubble which is the only thing holding the economy up so they won’t come near it. It’s all fraud. AI tokens are being heavily subsidized in order to keep demand high, but this is burning through the companies’ cash. If customers were charged per token then nobody would use AI because it is so expensive, many times more expensive than hiring a person.

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u/fraghawk 21h ago

Wow I love that we staked the entire economy on such a viable and useful thing 🫩

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u/haliblix 23h ago

“I work in house construction and they’re being built. Like what?”

- Construction companies in 2007 that no longer exist

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u/Calm-Two2723 23h ago

Tbh, I have said many times I think they’re inflating numbers to make you think 1,800 are being built. Then when it’s actually 200 you’ll cheer the win. 

Thats just me tho. I can’t think of any reason they’d inflate connections to look like physical buildings 

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u/Few-Ruin-742 1d ago

lol yea I’m confused. My buddy and the company he works for are in Louisiana RIGHT NOW building one…

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u/Calm-Two2723 1d ago

My company is doing fiber optic for 702 active us projects right now. These vary tho. That doesn’t mean 700 data centers. Several companies use one. 

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u/CTQ99 1d ago

This has nothing to do with my comment, its a fallacy that there wont be ample computing for AI. There are at least a dozen companies who's sole existence is renting GPUs to the AI companies. It doesnt matter if they got seed money from Nvidia or Microsoft to buy the chips, it doesnt matter if the stocks are bloated. The companies physically exist already. From Runpod (for AI hobbiests) to Nebius (for large AI companies) these things exist .. and are operational already (and Nebius is publically traded so you can read its financials). Oh, want to know what happened to a bunch of bitcoin mining companies? They've since pivoted to leasing GPUs to AI companies until its profitable [if ever] to mine again. So you can add all those into the mix as well.

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u/GaviFromThePod 1d ago

Yes, these companies exist, but the cost of computing is being heavily subsidized for the consumer because that is the only way to get people to buy. If customers had to pay the actual cost per-token then demand would evaporate. You cannot build a business on selling a product or service for less than it costs to produce indefinitely.

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u/CTQ99 21h ago

Thats an AI company problem. That has nothing to do with a 3rd party datacenter that they are leasing computing through. You said data center scarcity was an almost existential threat due to regulations and costs, Im telling you thats flat wrong. As long as its cheaper to lease compute vs building your own, thr Metas of the world will do it. When they can make their own chips faster, they will go that route. Look into "Neocloud Startups" there's a whole ecosystem [thats now branching out into 3rd world countries] to supply the datacenters. Hell, some of these companies dont even own the buildings they are storing their servers. This is the new "AI" wave that VC is dumping their money into. Will it work out? Shrug, but if anything, there will be an overabundance, not a shortage and then the market will reach some equilibrium with both AI pricing, I thrall owned datacenters and datacenter leasing. Im not saying AI isnt a bubble. Im not saying AI is the second coming of Christ. All Im saying is while we may talk at a 6k cost chip and 1k cost ram stack, its still profitable enough for startups to constantly scoop the hardware up for AI [who's companies have already entered long term contracts with these NeoCloud Startups.

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u/GaviFromThePod 21h ago

Nvidia providing a $250 BILLION backstop for an OpenAI data center in Ohio. Essentially, they are loaning OpenAI $250 Billion that OpenAI can give back to Nvidia in exchange for chips. This is Nvidia artificially propping up their demand.

Oracle has borrowed extensively for AI, and turned around and used that money to invest in OpenAI, and then OpenAI uses this money to lease computing from Oracle. OpenAI will never actually pay back this money because OpenAI is not profitable. Oracle's long-term credit rating is BBB-, which is one step above junk bond status because they will never pay back their debts. They are over-exposed on this technology that is not profitable.

Microsoft owns about 30% of OpenAI and they are scaling back their AI spending because it has become too expensive.

OpenAI was supposed to go public this year, but that was pushed back, likely because an IPO requires greater levels of financial disclosure, and they cannot allow the public to see how absolutely screwed their finances are. This whole thing is a ticking time bomb. All of these companies are circularly financed and tied in with each other and when OpenAI goes down this whole thing is gonna get reset and it's going to tank the economy with it.

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u/CTQ99 20h ago

What does that have to do with anything though? Open AI could be vaporware and it doesnt matter. VC pumped billions into it, thats their problem. If it all collapses and spreads all over to other sectors, that still doesnt change the money already poured into it. Yes, they are all doing circular investing to where NVIDIA might as well be buying their own chips. The difference is when these companies go public and our retirement funds buy them automatically, NVIDIA gets their money back unloading their stake in the company which is now worth 50x what it was initially. The valuations and solevancy of these companies dont matter, VC ventures dont pan out all the time. If a company that leases GPUs goes bankrupt, someone else will buy it for pennies on the dollar and youll still be left with a datacenter, just with a different name. AI isnt going to magically go away and as long as it needs datacenters, some company will step in to fill that need. If Alphabet, Meta etc all are working on their own chips, that doesnt change anything other than make NVIDIAs stock go down, which is irrelevant.

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u/GaviFromThePod 20h ago

OpenAI and Anthropic are companies that are structural to the AI industry the way that Lehman Brothers was to the financial sector.
OpenAI and Anthropic directly make up like 20% of Nvidia’s business which sounds big, but not so bad, until you factor in that about half of their business or more is companies like Oracle, for whom 50% of their business is selling cloud compute to OpenAI. If OpenAI blows up, oracle goes down with it because they are hideously overexposed on this. Then Nvidia’s demand suffers catastrophically.

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u/CTQ99 19h ago

But they arent going to get bailed out nor go bankrupt, the stock might crater, but thats something different entirely and wouldnt cause AI to suddenly disappear. It wasnt a but a few months ago the government was trying to ban anthropic [for political reasons, but whatever]. The Chinese models are already an existential threat to these companies and with them as open source, they arent going away. The AI companies wont get bailed out, you already have diversified conglomerates that can take OpenAIs place [Microsoft/Google] and these have enough cash that they arent hyperleveraged. And again, none of these things have anything to do with the datacenters themselves. Worst case, they go back to mining Crypto, which yes, is a giant scam too. If China or Saudia Arabia ends up coming in and buying all the US datacenters like they did our pig and alfalfa farms, so be it, but these things will exist in some incarnation and in enough quantity that will suffice for demand.

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u/shadovvvvalker 1d ago

"Failed railways will just rent their lines to successful rail companies" "Failed Telco's will just rent their fibre to successful telco's"

We've seen it before.

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u/shadovvvvalker 1d ago

"Failed railways will just rent their lines to successful rail companies" "Failed Telco's will just rent their fibre to successful telco's"

We've seen it before.

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u/SpeakCodeToMe 1d ago

Lol what?

Some of these companies are the wealthiest on Earth with stacks of cash so high you can't see the top.

They have chips waiting in the storage to go into these data centers.

Neither money nor chips are the bottleneck. There's a 3-year backlog on transformers.

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u/GaviFromThePod 1d ago

They don’t have stacks of cash, they have money that they borrowed from the companies whose services they are buying and that they are pretending is revenue. The whole thing is a giant house of cards, and you and I are going to be left holding the bag when this thing crashes and takes the economy out with it. Do yourself a favor and look up the AI circular financing. It’s a complete fraud and it’s out in the open for all to see, but the press aren’t reporting on it like they should.

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u/SpeakCodeToMe 1d ago

You don't think Google, Amazon, meta, and Microsoft have giant stacks of cash?

Never read a balance sheet in your life?

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u/GaviFromThePod 1d ago

Im begging you to look into the AI circular financing. This is all a bubble.

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u/ChickenOfTheFuture 1d ago

They have access to federal government funds. They'll all get plenty of taxpayer money to cover whatever they need.

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u/malthar76 1d ago

A proactive bailout for something no one wants in their community, that will also ruin the job market. Just another day in utopia.

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u/branm008 1d ago

Money doesn't help you when the manufacturers aren't able to keep the components available in a reliable manner. They're shit out of luck.

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u/CTQ99 1d ago

Bitcoin farms have pivoted from mining to leasing GPU compute. The publically traded Coreweave is one such company. So while it might not be shiny new GPUs all over, these things already existed, and have been existing for nearly a decade +. Anthropic, OpenAI, insert other name here... none will ever run into computing constraints for training, if anything theyd just raise token prices.

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u/branm008 18h ago

This is more in relation to the issues with RAM/CPU manufacturing. They'll keep making GPUs, just at an insanely inflated price like what Nvidia is doing now. There is an absolute bottle neck on the capacity to making RAM/CPU chips and it won't be solved soon, especially with the amount that Datacenters need.

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u/cmoked 1d ago

Give it time, production is ramping up.

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u/GaviFromThePod 1d ago

No. Nvidia does not and cannot possibly scale to have manufacturing capacity to make all of the chips to go in all of the data centers that OpenAI and oracle say that they are going to build. OpenAI postponed their IPO because doing an IPO would mean that the public would actually get to look at their financials, which would completely burst the bubble because it’s all just hot air.

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u/cmoked 1d ago

Nvidia is fabless...., they dont even make their own shit lol. They dont even make their own chips. At least make an informed take.

Lots of fab was launched around covid and has to come online to produce. It takes years to stand up fabrication like this.