🖥️ Everyone's arguing about whether AI data centers are the next dot-com bust. The history people cite to make the case is mostly wrong.

Take the mainframe comparison. The story goes that PCs made mainframes obsolete, so on-device AI chips will do the same thing to data centers. Except PCs never killed the mainframe. 71% of Fortune 500 companies still run them, they process 90% of credit card transactions, and IBM shipped a new AI-focused model in 2025. The market is still growing. Old compute and new compute have coexisted for 50 years.

The fiber comparison is half right. Telecoms really did overbuild in the late 90s: only 2-5% of buried fiber was lit in 2001-02. But that dark fiber wasn't wasted. It became the backbone of the modern internet within a decade. Investors who overpaid got wiped out. The infrastructure didn't.

And the "data centers will sit empty" prediction has a problem: vacancy is at record lows right now (0.3% in Northern Virginia), 80% of space under construction is already preleased, and 2026 hyperscaler capex is around $725B, up 77% in a year.

None of this means there's no bubble. Spending $725B a year concentrated in a handful of companies is genuinely unprecedented. But the crash case deserves better evidence than a history that never happened.

Read more:
ibm.com/think/news/world-runs-…
cbre.com/press-releases/global…
usatoday30.usatoday.com/money/…

#AI #datacenters #investing

🚨 Major US data center operators are shopping majority stakes worth tens of billions, per WSJ reporting this month.

Netrality, DataBank, Edged, and EdgeCore are working with bankers to sell controlling equity in their entire companies, not just individual facilities. DataBank alone could be valued near 25 billion dollars. Buyers lining up: private equity, infrastructure funds, sovereign wealth funds, and pensions chasing long-term contracted cash flows from AI tenants.

The backdrop is messy. The US-Iran war closed the Strait of Hormuz, knocking out about 20 percent of global LNG and a third of the world's helium supply (an LNG byproduct with no substitute in chipmaking). Construction material costs are up as much as 20 percent, and JPMorgan says over 60 percent of US capacity slated for 2027 completion has not even started construction.

Two ways to read the sales: developers cashing out at peak valuations while they can, or the normal lifecycle of infrastructure assets rotating from builders to long-term holders. Morningstar's own take: 'Is this the reallocation of capital or the top of the market?'

Meanwhile, capital is still pouring in the other direction. BlackRock and MGX just closed a 40 billion dollar acquisition of Aligned Data Centers, and Fluidstack raised 830 million this week at a 7.5 billion valuation.

Read more:
blockspace.media/insight/data-…
morningstar.com/stocks/private…
theregister.com/on-prem/2026/0…

#DataCenters #AI #Finance