Data Centers

Anthropic is investing $50 billion to build AI infrastructure in the U.S., starting with data centers in Texas and New York in partnership with Fluidstack. This includes 800 permanent and 2,000 construction jobs. The move emphasizes U.S.-based AI capabilities amid rising competition. Anthropic aims for profitability by 2028, leveraging custom facilities and partnerships with Amazon and Google for compute resources. Questions remain regarding energy demands, potential AI bubble risks, and government involvement in AI infrastructure funding.

Majestic Labs, founded by ex-Meta and Google silicon executives, secured $100M to disrupt cloud computing. Their novel chip design architecture boasts 1000x the memory of typical servers, potentially replacing ten racks with one and significantly reducing data center costs. Targeting hyperscalers and enterprises deploying AI, their technology consolidates server functionality, cutting power consumption and improving energy efficiency. Prototypes are expected in 2027. The founders aim to solve memory bottleneck issues for AI workloads.

Subsea cables, carrying over 95% of global data, are experiencing explosive growth driven by AI and data center expansion. Big Tech companies like Meta, Amazon, and Google are heavily investing in new cables, with investments projected to double between 2025-2027. Security concerns are rising due to potential sabotage, prompting increased surveillance efforts. Geopolitical tensions, particularly between the U.S., China, and Russia, are influencing regulations and supply chain decisions in this critical infrastructure sector.

Recent equity market pullback, especially in AI stocks, has sparked valuation and contagion concerns. Warnings about a potential market drawdown are increasing. BOE Governor Bailey cautioned about an AI bubble and speculative risks. Despite this, data center construction remains strong, and some see buying opportunities in tech. However, SoftBank’s losses and Michael Burry’s short positions signal waning AI appetite. Strategists suggest caution on US equities, favoring emerging markets benefiting from AI.

HSBC CEO Georges Elhedery and General Atlantic CEO William Ford addressed concerns about the disconnect between massive AI infrastructure investments and revenue growth at a Hong Kong summit. While acknowledging AI’s transformative potential, they cautioned that significant productivity gains and consumer willingness to pay for AI-driven services are longer-term prospects, potentially lagging behind investor expectations. Ford compared AI to railroads and electricity, technologies with profound impacts realized over extended periods, highlighting the need for patience and awareness of early-stage pitfalls like capital misallocation.

Fueled by megacap tech stocks, particularly Nvidia, the S&P 500 and Nasdaq reached intraday highs. Nvidia’s valuation surpassed $5 trillion after projecting substantial data center visibility, exceeding Wall Street estimates due to surging AI demand. Potential easing of US-China trade restrictions could further boost Nvidia’s growth. Corning also rebounded, poised to benefit from the increasing demand for fiber optic cables in data centers supporting AI. Investors are awaiting the Federal Reserve’s interest rate decision amidst earnings reports.

Meta CEO Mark Zuckerberg is doubling down on AI, allocating $14.3 billion to Scale AI and restructuring Superintelligence Labs. This significant capital expenditure fuels Meta’s AI capabilities and data center expansion, partnering with Oracle, Google, and CoreWeave. While Meta projects long-term returns, analysts express concerns about escalating AI spending and a potential valuation bubble. Despite increased capital expenditure guidance, market reaction was mixed, with some uncertainty about profitability and returns. Meta’s revenue growth, driven by AI, supports its confident investment strategy.

Corning’s (GLW) shares dipped 2.5% after a strong year, seen as profit-taking by analysts. CNBC reiterated its buy rating and raised the price target to $95, citing compelling growth prospects. Q3 core revenue rose 14% to $4.27B, and EPS increased 24% to $0.67, both exceeding estimates. Growth is fueled by data center demand (driven by AI), an expanded Apple partnership, and the Springboard initiative. Corning is strategically positioned in the solar energy market and anticipates strong Q4 sales. The company is also adapting to AI-driven demands.

Google and NextEra Energy are partnering to revitalize Iowa’s Duane Arnold nuclear power plant, aiming to provide 24/7 carbon-free energy for Google’s expanding AI infrastructure. The plant, closed in 2020, could restart in 2029 pending approvals. This reflects a growing trend of using nuclear energy to power data centers, driven by increasing electricity consumption due to AI. The partnership highlights the need for investments in reliable, clean power to support the AI-driven economy while addressing environmental concerns. The Iowa project could serve as a model for future collaborations.

OpenAI urges the U.S. to invest heavily in new energy infrastructure to compete with China in AI. Projects like “Stargate” demand enormous power, straining the U.S. grid. OpenAI advocates adding 100 gigawatts of new energy capacity annually to avoid an “electron gap” and secure leadership in AI. They highlight China’s rapid power expansion as a concern. Increased AI power demands could spur investment in renewable energy and grid infrastructure.