AI and Data Center Investment Surge: Revolution or Hype? – Shimmy Says EP5

Hey everyone, it's Alan Sch here for another episode of Jimmy Says, Shi Says, says, thanks for joining us. Whether you're watching us live on LinkedIn, or maybe on our YouTube channel, or Textron tv or wherever you're watching it, I appreciate you joining in and look forward. If you have any questions or comments, feel free if you're on live here to, to put it in.

I wanna talk today about some irrational exuberance, perhaps, or maybe not, around the AI and data center space. You know, it's been going on now for a while, but it's certainly been accelerated with the incoming administration who likes to create tech oligarchs up to the White House and talk about what a commitment they're making to, uh, the, the AI and data specifically in the us. But many mistake, this is not just a US pork barrel or, or fast of, of, you know, pledging dollars or telephone for AI and data center.

It's a worldwide phenomena, whether we're talking about Europe or Asia, China, everywhere in the world, money's being pledged to plow into AI technology and data centers. And I, you know, I get it and I get the promise of ai, but if you look at the numbers, it just doesn't add up. You gotta ask yourself is, are we, who, who are we doing, are we doing this to political favor to keep tariffs slow or to just keep up with the Joneses?

But let me give you an idea what I'm talking about here. If you don't, my, I'm old school on me here and come up to a flip chart and, and write some numbers down. I promise I won't write cursive, so you'll be able to, to read it.

But let, let's just look at like some of the, the money that's been pledged in, in this AI data center, telethon just this week. Apple pledged 500 billion. Everything I'm going to give you today is in billions, by the way.

So that's from Apple. They pledged $500 billion in US investment. Now, truthfully, this wasn't done as part of a President Trump thing or anything like that.

It's consistent with numbers they've talked about before, but they also claim that that $500 billion will lead to perhaps, uh, 20 K jobs. 20,000 new jobs. Wow, sounds great.

$500 billion at 20,000 new jobs means each job costs us about $25 million. Those are pretty expensive jobs. I hope people will be paid that well, but that's not all right.

We, we previously saw the Stargate project, you know, with the headline by Oracle and, and, uh, SoftBank and OpenAI, so that's Stargate. They also pledged $500 billion and said it could lead to hundreds of thousands, hundreds of thousands of jobs. Well, that's at least cheaper per job than Apple has us, but we're, we're at a trillion dollars here, guys.

Let's add in some other money. Meta has pledged certainly $65 billion this year on AI and data centers, but there's talk of them even going up to 200 billion. Okay?

Microsoft alone, that's meta Microsoft. Well, they've pledged for sure 65 billion of their own, Excuse me, 40 billion of their own, but also working with the good folks at BlackRock largest, you know, PE company in the world on another $80 billion pledge, and with the UAEI, I believe it's their sovereign fund for a hundred billion dollars investment. That's not all US by the way, but a hundred billion dollars.

Then we have the damac, D-A-M-A-C Damac run by that fellow from Dubai that also carries favor with the administration. They've pledge asked small potatoes, a mere $20 billion to damac. By the way, Microsoft says that that a hundred plus billion dollars will lead to the next billion jobs that are AI related.

That's a billion jobs AI related, much cheaper than the Apple jobs. I don't know what our economy would be like with a billion jobs, more, or worldwide economy, I guess we could use it. Then we have Jeff Bezo, he, Jeff Bezos, he's of, we're only talking about free trade and, and personal freedom fame.

He claims Amazon is gonna pledge 11 billion, yeah, me, a bag of shells for Amazon. But they've already committed via AWS and Amazon to a hundred billion dollars this year in data center and capital expenditures in, in infrastructure like that. Not to be outdone, the Royal Fi family of, of Saudi Arabia.

9 billion in ai in Saudi, in Saudi itself. That's an awful lot of money. But, you know, that by the way, comes outta business, the business standard.

Most of these other ones I came out of here, uh, were from, uh, all from the business standard. So if you wanted to look them up, the uk they haven't really announced their full project yet, but they have already pledged 14 billion. So in line with Saudi Arabia, France, of course, went out and made a bold, bold mark right at that last conference.

They pledged $112 billion, and not to be outdone the eu. The EU went out and said, well, France, you're not alone. The EU stepped up for $206 billion.

These are all billions with B Now, China, well, they don't really give you the real numbers and you don't know what they're really paying their people, but China has said that they are definitely committing $22 billion to ai, and they've also claimed that China, the state government itself, in support of the Alibaba, Tencent by dance, the Chinese tech industry, the state is gonna put in $138 billion. It's probably more than that even, but 138 billion state sponsors for Chinese tech, Their version of Stargate. And then the good folks at Alibaba, one of the Chinese tech giants have pledged another $53 billion for AI and data centers.

Wow. Get your calculators out. I I tried to calculate this off, off, uh, camera earlier, depending on which some of these, you know, uh, are, are ranges we're dealing with over 2 trillion.

That's with a t, not a B, $2 trillion in investments in AI and data center. $2 trillion plus 2 trillion. Now, let me put it in perspective for you.

Sorry for the aids here, fa, but I, I like to do this. So this is a chart, and hopefully you could see it. These are the top 20 countries with the largest GDP gross domestic product in 2024 and 2023.

As you could see, the US leads this past year was just shy of $30 trillion, China 18 and change, but, and it, it falls off pretty rapidly from there. 7. Japan is at just over four.

India just under four UK at three and a half, but it over $2 trillion. The amount of money pledged to AI and data centers comes in somewhere around here between Italy and Canada, right in the top 10. So the, the amount pledge to AI and data centers ex is bigger than the GDP of, except maybe the top six or seven countries in the world.

It exceeds that. Now, where are we spending $2 trillion? Well, probably, maybe as much as half of it.

I'm gonna sit back down here maybe as much as half of it goes to semiconductors. Well, that's an awful lot of semiconductors. I'd be buying more, more Jensen Wong's, Nvidia too, if I were you.

Um, you know, that's, that's a trillion dollars in semiconductor sales. Um, a lot of it's gonna go to conduct generating electricity for all these data centers and all these AI processors and cooling them down and everything. We don't have the electrical capacity to do this, so we're going to need to build electrical infrastructure or maybe come up with new electrical, uh, technologies that are more efficient, less wasteful, more sustainable.

Those sustainability seems to be a dirty word in the US these days. Um, or you could take another view. Is this all nonsense?

Is this just people wanting to stake their flag in the race? How much will actually be spent? How much do we know of this will actually work, right?

How much of it is going to, because we've seen this cycle before, right? The last time Trump was president, the guy from SoftBank marched his butt up there, and I think he at that time pledged $50 billion and was gonna do, I don't know, 50,000 jobs or something, still cheaper than Apple's jobs. A million dollar job, 50,000, and was dubious whether it was spent, by the way, this doesn't include the money that was included under the Biden administration for the CHIP act to build chip foundries and data centers and so forth.

I'm all for a digital future. I, I've, I've been in the digital world for 30 plus years, but in the words of Alan Greenspan, is this irrational exuberance? Is this just people trying to flatter the administration and the president in particular so that he doesn't impose tariffs on them?

Is this the world involved in, in, you know, making up an AI gap? Like there was a missile gap with the Soviets, by the way, we haven't heard anything. I don't know if Russia has this kind of money to be putting in here.

184 trillion. There's more than, you know, it's about what we're, uh, investing in AI and data centers alone. Um, as a, a user here is writing this signals a shift towards AI driven economics, cloud expansion, expansion, and computing power dominance.

I hope so, because there's another school of thought that says, Hey, AI is relatively unproven. We don't know how game changing it's gonna be. It certainly has the promise to be game changing.

I believe it could be game changing as much as the internet itself was. But at what price? At what price, right?

Are we, I don't know. Where could that $2 trillion be used? Is it something for space?

Is it for medical research? Is it to make sure no one's hungry or dying of measles in this country? Is it supporting our aging population?

Maybe we need it for more jobs, right? We, we have less people who are gonna be working. We need AI to do more of these jobs.

Ai, agentic ai, robotic ai, all, all of the above. What we're really building is Jensen Wong says, is our AI factories and that's what these data centers represent, or is this really all just political stocks? I don't know what the right answer is and what's true or not true here.

What I do know is we certainly seem to be in some sort of bubble and, and hyperinflation or hyper expansive kind of, uh, area. If I was a young person out there, I'd be thinking about how do I ride this wave? com days, and I was right in the middle of the dot coms.

We have seen nothing like this. It, it has the potential to change the, the world economic, uh, order strap in. 'cause I think we're in for a ride, guys.

This is Shimmy. Says, we'll see you next Thursday.