Joe Tsai, co-founder of Alibaba, cautioned at the HSBC Global Investment Summit about the datacenter spending bubble as corporations rapidly invest in AI infrastructure beyond actual market needs. With significant commitments from tech giants like Microsoft and Meta, concerns rise over oversupply and the risks associated with speculative datacenter construction. Despite Alibaba's own major investments planned over the next three years, analysts such as TD Cowen have reported an oversupply situation, and Gartner noted a growing skepticism among CIOs regarding AI's transformative potential.
"I start to see the beginning of some kind of bubble," said Tsai, who noted some of the projects are raising investment to build datacenters on spec, meaning they don't even have a buyer or tenant lined up before going ahead.
Warning signs of overheating datacenter expenditure emerged last month when financial services biz TD Cowen published a report claiming Microsoft is rowing back on leases for datacenter capacity it intended to take out after finding itself "in an oversupply position."
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