More than the moon, more than the railroads, more than the Interstates

Investment Analysis Clubs Macro Economic Trends and Risks
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From today’s WSJ, a quick summation of the breathtaking amount of money the big 4 are spending on AI and data centers:

Not only are they far outspending the amount of money it took to construct the Interstate Highway System, or the Apollo missions to the moon, or even the helter-skelter buildout of the railroad system (which would later be known as “the railroad bubble”), they’re doing so with a increasing percentage of their sales:

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It’s bigger than the railroad expansion of the 1850s, the Apollo space program that put astronauts on the moon in the 1960s and the decadeslong build-out of the U.S. interstate highway system that ended in the 1970s.

We’re talking about the data centers now being built and financed by some of the world’s biggest companies in the artificial-intelligence boom.

Four U.S. tech giants—Microsoft , Meta Platforms , Amazon and Alphabet’s Google—are planning to spend up to $670 billion to build out AI infrastructure this year alone as they scramble to increase the computing power needed to operate and scale their AI-related endeavors.

[Emphasis original]

https://www.wsj.com/tech/ai/ai-spending-tech-companies-compared-02b90046?st=i2p3fv&reflink=article_copyURL_share

I have upgraded my home computer I dont know how many times across the decades, at least 5 or 6 I’d guess. And every time, instead of laboriously throwing out old and useless files, I just buy more memory because it gets cheaper and who wants to bother with that chore anyway?

It occurs to me that these guys are doing the same thing, only on a vastly larger scale. I mean we all know we’re being tracked, right? Everything I’ve ever watched on my Facebook feed is memorialized somewhere deep in the bowels of a data center. Every Amazon search, whether I bought the product or not. Every Google search, every everything - and it’s NEVER GOING AWAY.

Multiply this by, oh, 3 or 5 billion people, and you need a crapton of storage, and it’s going geometric. So instead of slimming down, they’re building out: miles and miles and miles of data centers, tens of thousands of rows of server racks, gigantic power lines coming in and dirty water going out, all so Facebook knows what posts I looked at in 2016. Add in Reddit, Instagram, Twitter, news archives, YouTube submissions, every email that’s ever graced an electron, and you begin to see how we got here - the question is: is it worth all this for what we’re getting back?

I mean the electrical grid buildout alone, not included in the charts above, will be ginormous, and won’t be free. The water usage, the low frequency humming near communities running 24/7/365. Is this really what we want? And given that AI is (obviously) going to consume ever more resources the more powerful and universal it gets, there’s a serious train wreck coming, but nobody knows when or how or if - to stop it.

Maybe the market will take care of it? Amazon and Facebook both took pretty sharp haircuts when they announced earnings - and plans. Maybe sanity will creep back in? It better be soon: the lights are flashing, I think.

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Two thoughts:

Unlike the Apollo space program or the interstate system these companies are spending their own money, not OPM.

As the CEO of Amazon noted this week, they are filling demand; everything the build is immediately used. AFAIK, there is no “dark fiber”.

DB2

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Except for the electricity part, including the grid updates and infrastructure needed to carry this load, and the water part, with a single data center using as much as 5 million gallons of water per day , as much as a residential town of 50,000.

But I’m sure none of that will splash back on consumers, because you can always trust big business to look out for the little guy.

As I noted, they’re saving everything from everywhere, apparently forever, as is everybody else (including me. But spinning up my 8T hard drive probably takes the same amount of juice as the 500MB drive of years past, so it’s not really the same.)

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And that reminds me of Obama’s “If you’ve got a business, you didn’t build that.”

DB2

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That’s a simple truth, why are you mocking it. Free enterprise doesn’t mean it is entirely build without public money, support etc. There are societal costs to the AI buildout, it is about time we recognize it. BTW, it is the red states which are lining up to say no to data center buildout.

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That quote is out of context. Here is the quote in context:

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business. you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

Context is not ancillary to meaning, it is critical to meaning, and Bob’s quote is so distortively out of context as to be a, ahem, mistatement. The context shows that the that of Obama’s statement refers to roads and bridges.

Sigh.

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Yes, and Goofy was referring to the electrical grid. All physical parts of our social ecosystem, which is why I said it reminded me of what Obama said.

DB2