AI Boom Fuels Frenzied Data Centre Investment, Echoing Dot-Com Era Risks
Prague – A surge of capital is flooding the data center market as companies race to support the escalating demands of artificial intelligence, mirroring the speculative investmentโ patterns seen during โthe dot-comโค bubble, experts warn. while the long-term benefits of AI remain uncertain, massive investments are being made โคin infrastructure with no guarantee โof future returns, raising concerns of a potential market correction.
The currentโ AI boom is reminiscent of the early 2000s, when capital expenditures outpaced investor confidence, leadingโข to irrational vendor behavior,โฃ according to Kupperman. “Vendors began acting irrationally toโ meet Wall Street’s goals. Lucent โand Nortel began lending โmoney to their customersโ to buy network equipment,acquired stakes in their companies so they could buy more equipment,and even bought capacity in their customers’ fiberโ networks so they could show revenue โgrowth and meetโ Wall Street’s goals,”โ he describes.โค โ Today, OpenAI, a โleading AI developer, has yet to generateโค revenue and is currently reliant on investor funding, a pattern shared by numerous other AI โcompanies.
Despite the potential for technological advancement,experts caution that innovation doesn’t automatically translate to investor profits. “Part of the investment will โฃend up as โa loss if projects based purely on AI hype do not find โขa lasting business model. We will then โขsee corrections on the capital markets, and theโค question is not if, but when and how โคhard they will be,” says Svรกtek.
However, even if the current AI boom โfalters, โคlasting infrastructure may remain, similar to the fiber opticโค networks laid during the techโ bubble or the railwaysโฃ built in the 19th century. “The tech bubble left fiber in the ground, and โAI may leave data centers if the โฃcurrent boom turns out โto be overdone,” the analysisโ notes.
The competitive landscape is further intensified by the ambitions of major technology companies. “The big โฃtechnology playersโ are striving for a dominant position at any cost.We are literally witnessing an AI โขarms race,” Pfeiler โobserves. Early signs of investor caution are emerging, with Bain Capital reportedly beginning to avoid investments โฃin data centers as โthe appetite for funding unprofitable ventures wanes.
