"When Oracle failed to meet revenue expectations and suggested that large-scale data centers may not be ready until 2028, it immediately chilled sentiment across the entire sector. On the same day the Dow pushed to new highs, the Nasdaq was hit hard, with anything even loosely tied to AI selling off aggressively. That divergence told us the market was reassessing the timeline, not the technology."
"I argued that there are two realities investors are only now starting to price in. First, most AI companies are realizing they are not going to make meaningful money for several years. They will need to invest hundreds of billions of dollars before returns show up, even if some of that capital comes from private equity or bank financing. Second, building data centers is slow, politically complicated, and infrastructure-heavy."
Oracle's missed revenue expectations and its projection that large-scale data centers may not be ready until 2028 chilled sentiment across AI-related equities, with the Nasdaq selling off despite Dow gains. Investors are reassessing deployment timelines rather than the underlying technology. Many AI companies will not generate meaningful profits for several years and will require hundreds of billions in investment. Data-center construction is slow, politically fraught, and infrastructure-intensive. Local resistance over water, power use, and rising rates is growing. Grid upgrades, transformers, and transmission systems face shortages and long lead times, and hardware bottlenecks make rapid saturation impossible.
Read at 24/7 Wall St.
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