Data center madness
Two estimates of how crazy AI Capex has gotten, and four new signs that public opinion has totally soured
TL;DR
- Economists Peter Berezin and Callum Williams estimate trillions in AI data center capital expenditure.
- Required annual AI revenue to justify costs is in the tens to low hundreds of billions.
- Republicans are reportedly abandoning data center projects due to economic concerns and public opinion.
- The AI industry's prospects have rapidly soured due to greed, stupidity, and arrogance.
- Big tech companies may face significant problems if data center economics collapse, with potential toxicity impacting bailouts.
Part I: costs and how much revenue you would need to justify those costs. Estimate #1 comes from Peter Berezin, Chief Economist at BCA Research.
(You can read his full post, with some graphs and a link to a longer report,here.)
Estimate #2, more conservative but still quite high, comes from Calum Williams (who works for The Economist) here:
@phl43","username":"econcallum","name":"Callum Williams","profile_image_url":"https://pbs.substack.com/profile_images/1218114839278686208/DLv8gqdi_normal.jpg","date":"2026-08-21T13:58:44.000Z","photos":[],"quoted_tweet":{"full_text":"$10 Trillion In Annual AI Revenue May Be Necessary To Monetize All The Capex Being Plowed Into Data Centers\n\nHyperscaler capex is expected to reach $1 trillion in 2027, most of which will be AI-related. Let us assume that a capex bust is avoided and capital spending remains at $1","username":"PeterBerezinBCA","name":"Peter Berezin","profile_image_url":"https://pbs.substack.com/profile_images/1635243673548906496/8lhtDS1B_normal.jpg"},"reply_count":5,"retweet_count":13,"like_count":80,"impression_count":15177,"expanded_url":null,"video_url":null,"video_preview_media_key":null,"belowTheFold":false}" data-component-name="Twitter2ToDOM">Either way, we are talking about current revenues in the tens of billions (or low hundreds of billions if you are really optimistic), against Capex in the trillions. You don’t have to be Einstein to see the math ain’t mathing.
Part II: public opinion, refracted through politics. In keeping withmy post from Wednesday on Republicans panicking, Republicans are abandoning data centers like rats abandoning sinking ships.
Here are four new examples from roughly the last 24 hours,collected by the pollster Adam Carlson:
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Nobody wants this, and the economics make no sense.
Perhaps no industry in history has spoiled its own prospects faster than the AI industry.
Through a mixture of greed, stupidity, and arrogance, the heroes of 2023 have become the villains of 2026.
Until now, I always assumed the game plan was to get a bailout if and when the economics fall apart, but at this point the big tech companies might be more screwed than I thought, given how toxic data centers have become.