The AI Industry Is Lying to You
A deep dive into the discrepancy between announced data center capacity and actual operational reality, revealing a potential cooling of the AI infrastructure boom due to power constraints and speculative planning.
The entire AI bubble is built on a vague sense of inevitability — that if everybody just believes hard enough that none of this can ever, ever go wrong that at some point all of the very obvious problems will just go away. Sadly, one cannot beat physics.
Last week, economist Paul Kedrosky put out an excellent piece centered around a chart that showed new data center capacity additions (as in additions to the pipeline, not brought online) halved in the fourth quarter of 2025 (per data from Wood Mackenzie). The report framed it in harsh terms: US data-centre capacity additions halved from Q3 to Q4 2025 as load-queue challenges persisted. The decline underscores the difficulties of the current development environment and signals a resulting focus on existing pipeline projects.
Of the 241GW of disclosed data center capacity, only 33% of it is actually under active development. The total announced pipeline looks huge, but most of it is not real. Only a third is under construction, with the rest a mix of hopeful permits, speculative land deals, and projects that assume power sources nobody has actually built yet.
The report also adds that the majority of committed power (58%) is for “wires-only utilities,” which means the utility provider is only responsible for getting power to the facility, not generating the power itself. PJM, one of the largest utility providers in America, remains in trouble, with utility large load commitments three times as large as the accredited capacity.
When you do the maths, 61GW of IT load would require over a trillion dollars of GPUs. Based on the fact there were only $178.5 billion in data center debt deals last year, many of these are likely not being built right now. Capex growth decelerated for the first time since 2023.
Data center absorption — the net growth in occupied, revenue-producing IT load — grew in America’s primary markets from 1.8GW in 2024 to 2.5GW in 2025 according to CBRE. This is a far cry from the massive capacity being announced, suggesting a significant gap between industry hype and physical reality.
Source: Hacker News
