I came across an Oxford Economics estimate that between $31.6 trillion and $50 trillion could be spent on data centers and related infrastructure through 2050.
A cool fact they also shared is that is 45x-70x what it cost to build the entire U.S. interstate highway system, which is difficult to even comprehend.
The obvious concern is that we are building far more capacity than we’ll eventually need. AI demand is growing but models are becoming more efficient and the amount of compute required ten years from now could look very different from current estimates. I’m less interested in the expensive companies getting most of the attention. I’m more interested in the profitable businesses supplying the energy, cooling, networking and physical equipment behind this buildout.
If spending comes anywhere close to these projections, there should be companies with long runways that are already producing strong profits. The challenge is finding the ones trading at reasonable valuations without taking on the risk of owning capacity that may eventually become unnecessary.
Especially with all of the bubble talk, projections like these can be difficult to have confidence in. Is there a company that comes to your mind that has the combination of being able to capitalize on this incredible once in a lifetime buildout that is also trading at a respectable valuation?