AI jitters erupt after Democrats threaten data centre build-out

{"text":[[{"start":9.08,"text":"Market jitters about artificial intelligence have erupted since the Democrats swept to victory in the US midterm elections. The worries spread across all sectors as more than $3tn was wiped off US stocks last Thursday."}],[{"start":23.52,"text":"Investors are rattled by Democrat promises to halt the building of data centres across the country, with some warning the AI bubble that has driven markets to record highs may be about to burst."}],[{"start":34.36,"text":"In short, investors are less sure about the new technology, which has turned the industrial landscape of America upside down."}],[{"start":42.16,"text":"The race to power AI has seen oilfields, farmland and warehouse sites repurposed; electricians have walked off housing sites for better pay; and companies that usually build jet engines, make movies or mine crypto have reinvented themselves as technology suppliers to build data centres."}],[{"start":58.82,"text":"The boom in construction has led to a “very tight market”, says Pat Lynch, who leads data centre advisory services at CBRE, the world’s largest commercial property group. The availability of ready-to-use, pre-built physical space and power for data centres hit a record low at the end of 2025 over the 20 years that CBRE has been tracking the figure."}],[{"start":80.36,"text":"Chad Barrett, head of market intelligence at Data Center Map, which also tracks the industry and lists more than 12,250 data centres worldwide, says expansion is best measured by the growth of the companies that supply the data facilities."}],[{"start":94.44,"text":"The 50 largest US electrical contractors made $80.4bn in revenue in 2025, up 40 per cent on the year before, according to a report by trade publication EC&M. For Rosendin Electric, a large US electrical contractor, one of its biggest recent projects is a $3.4bn contract for a data centre being built in Abilene on a site larger than New York’s Central Park."}],[{"start":119.54,"text":"The west Texas city has become one of the busiest construction sites in America. Crusoe, which started out powering bitcoin mining operations but now develops data centres, is finishing eight buildings on the site for the Stargate Project, the AI venture backed by OpenAI, Oracle and SoftBank. Next door it is building a second campus for Microsoft with its own power plant."}],[{"start":141.44,"text":"“The biggest challenges at the moment are power, permits and labour,” said Steven Fisher, an industrials sector analyst at UBS, before the market rout. Lining up power is not a new issue, but just one of several “gating factors on the pace of data centre development”, he added. Even so: “Most of the companies we follow that have data centre exposure are still reporting very strong growth rates.”"}],[{"start":166.52,"text":"A greater challenge, however, now comes from the newly elected politicians. Three states at the centre of the AI build-out — Texas, Georgia and Ohio — elected Democratic candidates who have pledged to crack down on building data centres."}],[{"start":181.72,"text":"Customers for large AI data centres, which some in the industry describe as powered shells or sheds, fall into two camps."}],[{"start":188.72,"text":"The first are the so-called hyperscaler sites such as Stargate, built to feed the huge, private computing demands of big listed technology companies. Amazon, Microsoft, Alphabet and Meta, the four biggest customers for data centres, are expected to spend $760bn between them on capital expenditure this year, almost double last year’s $413bn, according to data provider Statista. The second are built for “neoclouds”, such as CoreWeave, which rent out access to AI chips. McKinsey expects about $7tn to be spent on data centre construction worldwide, including the US, China and Europe, this year."}],[{"start":227.76,"text":"Crusoe’s Abilene site is planned to reach 1.2GW, roughly the output of a large nuclear reactor. Data centres are typically sized by their energy demands rather than their floor space. Elsewhere, Meta is building a 5GW site in Richland Parish, Louisiana, which is expected to cost $250bn, and CoreWeave already runs more than 1.5GW and plans to reach 8GW by the end of 2030. Consultancy BloombergNEF estimates that the US will have 118GW by 2030, and S&P Global suggests data centre demand on the grid could reach 183GW by the same year, nearly triple the 2020 level."}],[{"start":268.4,"text":"Before anything is built, engineers must prove the local grid has the capacity to cope. Where it falls short, companies make their own power. That has turned Caterpillar, best known for yellow bulldozers and diggers used to clear the land for data centres, into an AI equipment supplier too. Developers are even repurposing jet engines. So-called aeroderivative turbines are adapted from aircraft engines, burning gas instead of Jet A-1 fuel."}],[{"start":297.08,"text":"Inside the buildings, heat is another problem. Vertiv, the technology industry’s first manufacturer of precision computer room air conditioning, has expanded into liquid cooling, which is considered more efficient as AI computer chips — which are more like graphics cards — run hotter than CPUs."}],[{"start":314.76,"text":"CBRE’s Lynch likes to refer to the typical modern data centre as a powered shed. The shed is now one of the cheaper parts of the product. By the end of August 2026, Oracle had spent a cumulative $77.8bn on computer, network, machinery and other equipment, three times the $25.5bn it had spent on buildings, according to its most recent financial statements. The cost difference becomes even more dramatic if you consider that the equipment depreciates, and therefore may need replacing, within one to six years. The buildings last for 40."}],[{"start":350.84,"text":"The scramble to get into the sector has also prompted some strange behaviour in previously unrelated businesses. Film studio Shadowbox Studios has been trying to build a 651MW data centre in Georgia on land that was initially earmarked for sound stages. Boom Supersonic, a Denver start-up developing supersonic jetliners, has begun selling engines for aircraft to data centres."}],[{"start":375.44,"text":"So far, the clearest winners have been the suppliers with overflowing order books. They are mainly the contractors, electricians, generator makers and cooling specialists that already had capacity before the boom."}],[{"start":387.52,"text":"However, their fortunes now depend on the newly elected Democrats after a hands-off approach from a Republican-led Congress and White House over the past two years. If Democrats carry out their promises on moratoriums and hit the brakes on construction, the electricians may start working on houses again."}],[{"start":null,"text":""}],[{"start":409.94,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794470811_7099.mp3"}