#hyperscalers

#hyperscalers

The Trump administration continues its AI push, working to defuse public opposition to datacenter energy and water consumption - while dangling a promise to exempt hyperscalers from chip tariffs to help them stock their facilities with GPUs and accelerators. To address public concerns, Washington wants tech giants to commit that their expanding datacenter estates across the US won't spike energy bills or drain local water supplies. According to Politico, a proposed voluntary pact between President Trump, the datacenter industry and megacorps like Microsoft, Google, Amazon, Meta and OpenAI, would establish principles around energy, water use and local community relations.

The 'build it and they will come' strategy is a trap. If you are a hyperscaler, you will own your own data centers. We foresee a significant financing crisis in 2027-2028 for speculative landlords.

That behaviour concerns its widely criticised practice of charging customers more for wanting to run and host its software (namely Windows Server) in competing cloud environments. It is claimed the tactic can make it cost-prohibitive for enterprise cloud users to run Microsoft's software anywhere but on the software giant's own public cloud platform Azure, which could potentially give it an unfair advantage when it comes to building its share of the cloud infrastructure market.

NextEra Energy on Monday tightened its grip on hyperscaler power demand, adding 2.5 GW of new renewable projects for Meta while deepening its partnership with Google, which already covers about 3.5 GW of capacity. Taken together, Meta and Google now touch roughly 18 percent of the 33.4 GW of generating capacity in operation at NextEra Energy's subsidiary, NextEra Energy Resources, underscoring both the growing appetite for datacenter power and the consolidation of supply among hyperscale customers.

How very "Here we go round the mulberry bush," right? Microsoft buys Anthropic's models; Anthropic runs Claude on Microsoft's Azure cloud; Anthropic buys Nvidia's chips; and both Microsoft and Nvidia invest in Anthropic. If that sounds like a big circle going round and round and back again... that's because it is. And honestly, it's making me dizzy.

Even as this trend has taken hold, the spread of the investment grade bond markets over treasuries, in aggregate, has gone from about 70 basis points to about 85 basis points today. I would anticipate that if the hyperscaler debt issuance theme continues, we could see spreads widen as much as 95 basis points, which is material when we're talking about a relatively low volatility market,

This year, these five "hyperscalers" have issued $121 billion in debt, including $27 billion alone to fund Meta's new data center in Richland Parish, Louisiana, Seliger said in a research note dated November 17. Amazon also issued $15 billion in new debt on November 17. To put that $121 billion in perspective, it's more than four times the average level of debt ($28 billion) issued by these companies annually over the previous five years.

The question isn't 'why does Signal use AWS?' It's to look at the infrastructural requirements of any global, real-time, mass comms platform and ask how it is that we got to a place where there's no realistic alternative to AWS and the other hyperscalers.

ServiceNow CEO Bill McDermott does not see artificial intelligence as a threat to business software, but rather as an opportunity to increase the value of enterprise platforms. According to him, the future lies not in autonomous AI systems that render traditional software obsolete, but in close collaboration between AI models, hyperscalers, and integrated business solutions. In an interview with CNBC, McDermott explained that ServiceNow has aligned its strategy with collaboration with the three largest hyperscalers.

The glorious visit of US President Donald Trump to the British Isles last week came with promises of thousands of precious GPUs, with Nscale, Microsoft, Google, and more teaming up to build a giant datacenter within walking distance of my house. But is the Tech Prosperity deal really a portal to a bright future or will it suck us in?

Given that corporate IT relies heavily on cloud-based infrastructure and services delivered via the public cloud, access to the data held in the cloud is paramount. Should all mission-critical data be held on-premise? What roles should digital sovereignty and digital residency play in a corporate IT strategy? These are among the questions being discussed at Forrester's forthcoming Technology & Innovation Summit in London.