Sequoia Capital reposted this
Next post in the 200b / 600b series turns from the revenue side of the equation to the cost side. We look at the data center construction boom and make 5 predictions for how this will affect the energy sector and the economy more broadly. 1. AI will catalyze an energy transformation. New solar construction, battery innovation, a resurgence in nuclear energy—these will be long-term effects of the AI wave 2. Some hyperscalers will find that they are not nimble enough to address rapidly changing data center requirements—new industrial AI players will emerge to fill this gap 3. Starting in the next 6 months, there will be a lot of headlines about delays in data center builds due to issues with liquid cooling, cluster size and power access 4. The industrial capacity needed to build new AI data centers will serve as an economic stimulus and create jobs in the real economy: Steel, energy, trucking and construction 5. When new data center capacity comes online, the cost of training and inference delivered by AWS, Azure and GCP will go down, to the benefit of startups https://lnkd.in/g7-6PrHJ
I believe some of this has already been playing out behind the scenes for at least a couple of years now, but you’re right in that it will accelerate. However, on the topic of hyperscalers, I wouldn’t discount their agility, even when it comes to moving mountains such as building data centers and innovating on the designs (just look at the development activity and track records of folks like Microsoft, Meta, AWS, and Google). The Crypto-AI data center pivot is interesting in that it presents a lean, minimally viable data center product for AI training, but nothing more, and their closets may contain too many skeletons. I am a bit skeptical about the durability and expect we’ll see a fanatical glut in data center capacity in a few years. (views/opinions my own)
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Agree with all points except number 5.. I don’t see any long term meaningful signs where cloud companies charge less than 5x to 10x margins relative to their costs. At least not the ones mentioned in this post.
I'll keep this in mind
Luis Castro
2w
David, do you think these energy investments will neutralize the huge amounts of Carbon Emissions we are having NOW because of AI, and will the promises be realized? Beyond being very accurate interpolators/extrapolators and instead being truly intelligent?
Gary Lee
2w
Curious to know how are storing all the training data and generated data in their AI DCs.
tagging Matthew Holt and Joy Bhosai, MD MPH
oh yeah
Many thanks 🙏 for sharing your salient thoughts David Cahn ! Best, Aaron
Engineering Physicist | @andercot | plasma arms dealer
2wMany such shovels