What happened
Citing data from regulatory intelligence firm RegLayer, the Financial Times reports that 47 large data center projects have fallen through this year. Analysts at equity research firm Bernstein believe only about 35 percent of planned facilities are feasible.
The causes
Several factors are behind the cancellations:
- Local communities mobilizing against data centers
- High interest rates and shaky bond markets
- AI revenue that remains elusive
People involved in the effort told the FT that the situation is threatening their ambitions.
Investor reaction
Shares in CoreWeave, a cloud provider closely linked to the AI data center industry, have fallen by more than 27 percent over the past month. The FT reports that labs like Anthropic and OpenAI have pushed so hard for these developments that they have swallowed outsized costs and deemphasized due diligence.
The big question
It remains unclear what happens to these projects if the AI industry's finances falter, a possibility economists have warned about for years. For now, construction is still moving forward, albeit much more slowly than anticipated. "People aren't just dropping their shorts for data centers anymore," one executive told the FT. "It's much harder today to finance a data center."
