Xinhua
03 Jun 2025

NEW YORK, June 2 (Xinhua) -- Data centers are drawing a crowd on Wall Street -- investment giants like KKR, BlackRock and Blue Owl have collectively plowed hundreds of billions into the industry, while some others doubt whether an industry bubble is being born, reported The New York Times on Monday.

"The spending frenzy has created concerns about whether too many data centers are being built. A TD Cowen analyst, Michael Elias, warned of potential 'oversupply' in the market as some technology companies, including Microsoft and Foxconn, have stepped away from some leases," noted the report.

Still, there has been a flurry of announcements in just the last two weeks: OpenAI plans to build a massive computing complex in the United Arab Emirates, and the investor Chamath Palihapitiya said he had bought real estate in Arizona and planned to ultimately raise 25 billion U.S. dollars to build a data center there.

Joe Tsai, chairman of Alibaba, which views AI as core to its business, also said he was starting "to see the beginning of some kind of bubble" in data center construction.

Blackstone, on the other hand, says it still sees strong demand from tech companies, which are willing to sign what they describe as airtight leases for 15 to 20 years to rent out data center space.

"And even as questions about overbuilding have surfaced, Blackstone has reiterated its commitment to building more centers and investing in the power plants needed to run the computers inside them," said the report.

The complexity and cost of running AI-focused data centers stem from the vast amounts of power they guzzle, which can be about 10 to 20 times as much per server or rack as general cloud computing. There is also the need to keep the centers operational 99.999 percent of the day, it added.