AI data centers face high risk of non-construction, experts warn

Bernstein Research found that only 35% of U.S. data center projects are likely to be completed, with the rest labeled as 'bragawatts.' Based on over 7,000 projects tracked by Aterio, companies like Amazon, Google, and Microsoft have higher credibility. O'Leary Digital scored poorly with a 0.35 out of 5, as its 15 gigawatts of planned capacity may see only 3% realized. Sergio Toro of Aterio noted that 30 to 40 gigawatts of new capacity are announced monthly, but only 7 gigawatts start construction. Texas faces a surge in electricity demand requests, with 450 gigawatts sought, far exceeding its 85 gigawatts of existing capacity. Many of these are speculative 'ghost projects' that may never materialize. The report highlights that even major players like Amazon face challenges securing electricity and other resources. Companies often over-commit to data center capacity, anticipating delays or cancellations. Bernstein estimates that about a third of unstarted projects will be delayed, another third will be completed, and the rest will fail. Despite the risks, the AI infrastructure boom remains real, with nearly 80% of the capacity from top tech companies being credible. As regulators in Texas review applications, the focus is shifting toward established players, leaving many 'bragawatts' behind.