AI Infrastructure: Overwhelmed by Demand

The surge in AI as the driving force behind cloud migration and integration with security and networking is setting the stage for monumental growth in AI CAPEX, forecasted to rise from $60bn in 2023 to $305bn by 2029. This growth necessitates a tripling of data center capacity to approximately 170 GW, a stark contrast to the 50 GW added over the past 25 years, highlighting a significant shift in infrastructure demands and pricing dynamics.

The anticipated bottleneck in data center capacity by 2025-26, alongside a predicted imbalance between data center power supply and demand, underscores the urgency for innovation and investment. This scenario presents a lucrative opportunity for companies like Microsoft, Cloudflare, DigitalOcean, and Equinix, poised to dominate the cloud/AI arena, considered the most crucial industry of the century.

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The market will see volatility in AI accelerator hourly and per volume pricing, as well as uncertainty around the timing of new AI revenue streams to support this infrastructure, all while managing supply chain issues.

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