Big tech companies have poured tens of billions of dollars into new data centers despite an apparent breakthrough in efficiency from Chinese start-up DeepSeek’s artificial intelligence system. The investors who had pumped trillions of dollars into tech stocks over the last few years are worried about whether their spending on data centers is excessive.
Amazon, Microsoft, Alphabet, and Meta have all reported plans to spend billions more than last year on new projects. Executives say they need to build as much as they can as quickly as they can to meet demand for AI services. The companies’ biggest challenge is the limited supply of chips, land, and power needed to build data centers.
However, executives believe that greater efficiency will expand the use and demand for AI. They argue that deploying AI, known as “inferencing,” is where their businesses will boom. As costs come down, AI will become more ubiquitous, and customers will be willing to spend more on applications that were previously cost-prohibitive.
The companies say they have to balance giving customers the illusion of endless supply with securing land, chips, and power for data centers, which can take years to secure. Executives claim they can adapt how they use their investments, but investors are unlikely to be thrilled about cutting into profits.
Despite the concerns, the tech giants continue to invest heavily in data centers as they compete to provide AI-powered services to customers.
Source: https://www.nytimes.com/2025/02/08/technology/deepseek-data-centers-ai.html