On September 30 The Economist wrote an article, “The Murky Economics of the Data-Centre Investment Boom,” raising the question of whether the super-hot surge in building data-centers could end up like the “1990s telecom bubble.” The deep crash of that bubble cratered a section of the U.S. physical economy and blew out associated financial markets that had pumped up the bubble.
The Economist pinpoints some of the problem, writing: “The strength of demand for generative AI may be the most critical factor determining whether or not this infrastructure boom ends in a bust. But three novel aspects of the data-centre building frenzy add to the uncertainty: the centres’ remote locations, the non-public firms financing them and the weak credit quality of some borrowers. This trifecta reminds some sceptics of the last great infrastructure debacle: the telecoms boom of the late 1990s. Yet plenty of others are holding their noses and diving in.”
Regarding remote locations of the data-centers, The Economist cites Stargate, a $500 billion AI infrastructure project being built by OpenAI, Oracle and SoftBank, in a part of Texas “with lots of wind and solar energy—-and empty space.” Many other data centers are similarly remotely placed. The collective financing needs of the data-centers is enormous, and it is being conducted through large, and in some cases risky financing mechanisms to cover the projects
To give a sense of the scale involved:
• Statista, a statistical gathering company, reports based on the work of researcher Petroc Taylor, that as of March 2025, there were 5,426 data centers in the United States. By comparison the next leading countries in terms of the number of data centers were Germany (529), United Kingdom (523), China (449), and France (322). The U.S. possesses apparently 40 to 50% or more of the world’s data centers.
