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I know everyone and their mother is balls deep in AI right now. Every time a company mentions the words "Data Center", "Compute", or "AI", the stock pumps 20%.
But honestly? I’m calling bullshit on the long-term relevance of these massive data center farms.
Hear me out.
Right now, the whole AI narrative relies on brute-forcing compute power. We are building these gigantic, insanely inefficient concrete boxes that guzzle the power of a small country just to run some GPUs, and half of that energy is literally just used so the servers don’t melt themselves. It’s essentially a giant, loud heater. How is this sustainable?
Tech moves exponentially. Whenever something is THIS inefficient and highly demanded, human ingenuity finds a shortcut. I don't know exactly what the new tech will be. Maybe it's quantum, maybe it's localized edge computing on biological chips, maybe it's something entirely different. But betting that we will just keep building bigger, hotter, and more expensive power-hungry warehouses for the next decade seems completely delusional to me.
Because of this, I am seriously skeptical about the current infrastructure players. I honestly don't even know if companies like NBIS or IREN etc. will even be relevant in 1-2 years. I'm not saying they will go bankrupt and disappear overnight, but their current sky-high valuations will tank. They will just become obsolete bag-holder traps once the tech pivots to a more efficient alternative, turning them into boring, low-margin utility dinosaurs stuck with outdated infrastructure.
Am I the only one seeing this? The current tech is just a stepping stone, not the final destination. The moment a viable, low-power alternative drops, these data center stock premiums are going straight to zero.
TL;DR: Data centers are grossly inefficient power-guzzlers. A new, more efficient tech alternative will eventually replace the current meta, and current hype tickers (NBIS, IREN etc.) won't go bust, but they will lose all their relevance and hype in 1-2 years.
Positions: Balls deep in NBIS and IREN calls that I bought at the absolute top yesterday.