The Week Ahead: 31 March - 6 April 2025

Welcome to The Week Ahead! Your Forward-Focused Dispatch on Digital Infrastructure. Delivered every Monday, this newsletter breaks down the most significant finance and investment developments and trends in the world of digital infrastructure this week. Gain access to all our premium content, including news, features, videos, and podcasts, by registering for a The Tech Capital account here.

IN FOCUS

In this week's newsletter, we look at:

• Data Centre Bubble: Is AI Infrastructure Investment on Cloud Nine?;
• First-ever InfraAI Global Summit 2025 in Athens was a success;
• Most read headlines on The Tech Capital.

Dear Reader,

What a week it's been! We're still buzzing with excitement from the incredible success of our first-ever InfraAI Global Summit 2025 in Athens. The event truly exceeded our wildest expectations, and we're thrilled to share the highlights with you.

Picture this: over 50 partners, 50 speakers, and 153 attendees from across the digital infrastructure landscape converged in the beautiful Athenian Riviera. From forward-thinking investors and policymakers to seasoned operators and advisors, the diversity of perspectives and expertise was truly remarkable. The energy was palpable as we delved into the transformative role of AI in shaping our infrastructure future.

We owe a huge debt of gratitude to our amazing sponsors who made this event possible. Industry giants like Digital Realty, InfraPartners, Nscale, Start Campus, EdgeConneX, and many others stepped up to support this groundbreaking summit.

But wait, there's more! We're over the moon to announce the launch of The Tech Capital Magazine, our brand-new quarterly print publication. We couldn't think of a better place to debut our inaugural Q2 2025 issue than at the summit itself. This 128-page powerhouse is packed with in-depth analysis and industry insights that will keep you on the cutting edge of digital infrastructure developments.

Our cover story, "Rebooting the AI-merican Dream," dives deep into the global AI arms race. We're talking about US President Donald Trump's audacious Stargate initiative - a US$500 billion bid for AI supremacy that's sparked a mind-boggling US$1.4 trillion investment surge in the sector. It's the kind of seismic shift that could reshape our entire industry, and we're here to help you make sense of it all.

Inside the pages of our magazine, you'll find a treasure trove of information on the hottest topics in our field. We're exploring the evolution of AI-ready data centers, tackling the energy consumption dilemma, and taking a close look at the Nordic region's appeal for data center investments. We're also keeping you up to speed on the latest M&A activities, emerging technologies like liquid cooling systems, and even delving into the geopolitical implications of recent subsea cable incidents.

As we reflect on the summit's success and the launch of our magazine, we're reminded of just how rapidly our industry is evolving. The pace of innovation is breathtaking, and the role of digital infrastructure in shaping our future has never been more critical. We're honored to be on this journey with you, pushing the boundaries of what's possible and uncovering new opportunities at every turn.

Stay connected, stay curious, and let's continue to drive progress in our incredible industry.

We invite you to join us across different social media platforms and also subscribe to our daily newsletter.

At The Tech Capital, You Lead. We Report.

Regards,

The Newsroom

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THE BIG STORY

Data Centre Bubble: Is AI Infrastructure Investment on Cloud Nine?

Here's what happened:

Alibaba Group Holding Ltd. (NYSE: BABA) Chairman Joe Tsai has raised concerns about a potential bubble forming in data centre construction, suggesting that the current pace of development may exceed initial demand for artificial intelligence services.

Speaking at the HSBC Global Investment Summit in Hong Kong, Tsai expressed apprehension about the indiscriminate rush by major technology firms, investment funds, and other entities to establish server bases across the United States and Asia.

The billionaire executive and financier noted that many of these projects are being initiated without clear customers in mind.

“I start to see the beginning of some kind of bubble,” Tsai told delegates. He added: “I start to get worried when people are building data centres on spec. There are a number of people coming up, funds coming out, to raise billions or millions of capital.”

The AI infrastructure race has seen significant investments from tech giants on both sides of the Pacific.

Microsoft Corp. (NASDAQ: MSFT), SoftBank Group Corp. (TYO: 9984), and others are allocating billions of dollars to purchase crucial AI development chips from manufacturers such as Nvidia Corp. (NASDAQ: NVDA) and SK Hynix Inc. (KRX: 000660).

Alibaba itself has committed to investing more than 380 billion yuan (US$52 billion) over the next three years as part of its all-in AI strategy announced in February.

The e-commerce giant’s shares declined by over 3% in Hong Kong following Tsai’s comments.

The data centre construction boom extends beyond China, with server farms emerging in various locations, including India and Malaysia.

In the United States, discussions around the Stargate project envision an investment of approximately US$500 billion.

Tsai particularly highlighted US spending, noting: “I’m still astounded by the type of numbers that’s being thrown around in the United States about investing into AI. People are talking, literally talking about US$500 billion, several 100 billion dollars. I don’t think that’s entirely necessary.”

Major US tech companies have made substantial commitments to AI infrastructure this year. Amazon.com Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL), and Meta Platforms Inc. (NASDAQ: META) have pledged to spend US$100 billion, US$75 billion, and up to US$65 billion, respectively.

However, concerns about overcapacity have begun to surface. TD Cowen analysts reported in February that Microsoft had cancelled some leases for US data centre capacity, raising questions about whether the company is securing more AI computing capacity than needed in the long term.

Microsoft executives have downplayed these concerns, stating that the company is spending more than ever before, primarily on chips and data centres.

The tech giant expects to spend $80 billion this fiscal year on AI data centres but anticipates the pace of spending growth to slow in the year starting July.

Tsai’s cautionary stance comes amid growing scepticism on Wall Street regarding the extensive AI-related spending.

Critics have pointed out the persistent lack of practical, real-world applications for AI, despite the significant investments being made.

The situation is further complicated by developments such as Chinese startup DeepSeek’s release of an open-source AI model, which it claims rivals US technology but was built at a fraction of the cost. Although, details on DeepSeek’s true costs remain scarce.

Here's our take:

The recent comments by Alibaba's Chairman Joe Tsai regarding the potential bubble in data centre construction for AI services raise critical questions about the sustainability and practicality of the current AI infrastructure boom. While the tech industry's enthusiasm for AI is palpable, it's crucial to examine the realities of this rapid expansion.

Firstly, the scale of investment is staggering, there's no way around that. With major players like Microsoft, Amazon, and Alphabet committing hundreds of billions of dollars to AI infrastructure, we must question whether this level of spending is justified by current or near-future demand. The speculative nature of some of these investments, as highlighted by Tsai's concern about data centres being built "on spec," suggests a disconnect between supply and actual market needs.

The supply chain's ability to meet this exponential growth is another critical factor. The semiconductor industry, particularly companies like Nvidia and SK Hynix, are under immense pressure to produce the specialised chips required for AI development. The sudden surge in demand could lead to bottlenecks, price inflation, and potential quality issues as manufacturers rush to meet deadlines.

From an energy perspective, the feasibility of this massive expansion is questionable. Data centres are notoriously energy-intensive, and a 100-fold increase in capacity would require a corresponding surge in power generation and distribution. This raises significant environmental concerns and challenges our current energy infrastructure's capacity to support such growth sustainably.

Moreover, the lack of clear, practical applications for AI that justify this level of investment could be worrying for some. While AI shows immense promise, the gap between theoretical potential and real-world implementation remains substantial. The release of open-source AI models, like that from Chinese startup DeepSeek, which claims to rival US technology at a fraction of the cost, further complicates the landscape and questions the necessity of such enormous investments.

Is the rapid expansion of AI infrastructure truly aligned with practical demand, or are we witnessing an overinvestment that surpasses the current realistic needs of the AI revolution, despite its transformative potential? Only time will tell.

LONG READS

• The insider view: Colocating data centres and renewables

Soluna Holdings CEO John Belizaire explains how he built his business co-locating data centres with renewable projects. Read more here

• Financing strategies for global subsea infrastructure

While hyperscalers are funding and constructing the majority of the newest and largest subsea cable infrastructure, at least in Europe, there is still significant space for private companies, research institutions, and telecom carriers to participate. Read more here

• What does DeepSeek mean for data centres?

A faster shift to inference and more distributed AI facilities is more likely than a demand crash, the industry tells The Tech Capital. Read more here

QUOTE OF THE WEEK

WEEK IN PREVIEW

• TLKM (Telkom Indonesia) - Wednesday, March 26, 2025: Telkom Indonesia, the Southeast Asian telecom giant, is poised to unveil its Q1 2025 earnings. The report will likely spotlight TLKM's 5G network expansion and digital transformation initiatives. Investors are eager for insights into the company's strategic partnerships, potential acquisitions in tech and digital services, and the performance of IndiHome amidst rising competition. TLKM's ability to diversify revenue streams and maintain market dominance in Indonesia's evolving telecom landscape will be crucial focal points.
• TBIG (Tower Bersama Infrastructure) - Thursday, March 27, 2025: Tower Bersama Infrastructure, a major Indonesian tower company, is set to release its Q4 2024 results. The earnings report will shed light on TBIG's tower portfolio expansion and tenancy ratios, critical metrics in the telecom infrastructure sector. Analysts will scrutinise the company's strategies to leverage the ongoing 5G rollout and navigate potential regulatory changes. TBIG's debt management and capital expenditure plans will be of particular interest, as they reflect the company's growth trajectory in the dynamic Indonesian telecom market.
• 688 (China Overseas Land & Investment) - Thursday, March 27, 2025: China Overseas Land & Investment's Q4 2024 financial results are highly anticipated amidst China's volatile real estate market. The report will likely focus on 688's contracted sales figures, land bank acquisitions, and strategies to navigate the challenging regulatory environment. Investors will keenly observe the company's portfolio diversification efforts, including ventures into data centres and commercial and mixed-use developments. 688's financial health, particularly its debt levels and cash flow management, will be crucial indicators of its resilience in the face of market headwinds.

TTC CONFERENCES

The Tech Capital International Finance Forum and Global Awards, IFF25, is once more coming to London in May 2025.

This is a must-attend event for digital infrastructure professionals worldwide, with a focus on addressing pressing global financial issues and expanding the digital infrastructure economy.

The forum offers a unique platform for networking and exchanging groundbreaking ideas, providing attendees with the opportunity to expand their professional network and gain expertise.

With a combined market cap exceeding US$1.2 trillion, the event is the ultimate platform for industry leaders to convene, inspire, and forge valuable connections.

For more information, visit here.

MOST READ LAST WEEK

• Portugal eyes $13bn investment in data centres - Full Story
• Brazil aims to attract $350bn in data centre investments over next decade - Full Story
• 5GW hydrogen-powered “Data City” planned for Texas - Full Story
• Alibaba chairman cautions against speculative multi-billion dollar data centre investments amid AI boom - Full Story
• Nscale, InfraPartners join forces to construct largescale AI data centre in Norway - Full Story
• ADQ and ECP form $25bn JV to expand U.S. power generation for data centres - Full Story
• Prime Data Centers acquisition cleared by EU regulators - Full Story
• Microsoft's $3.3 billion Wisconsin data centre project faces second halt - Full Story
• KKR’s $1bn Global Technical Realty launches Israeli underground data centre - Full Story
• DigitalBridge’s European head Matt Evans steps down amid stock struggles - Full Story
• Pure Data Centres launches hyperscale facility in Abu Dhabi's Yas Island - Full Story
• Digital Realty Trust sees $272m in institutional shifts as stock wavers - Full Story

WATCH ON THE TECH CAPITAL

In a video interview conducted by The Tech Capital at PTC'25 in Honolulu, Douglas Loewe, CEO of Kao Data, offers insights into the rapidly evolving landscape of data centre real estate and expansion, with a particular focus on the burgeoning artificial intelligence (AI) sector.

LISTEN ON THE TECH CAPITAL

INDUSTRY CALENDAR

The Tech Capital International Finance Forum & Global Awards London- 12-13 May 2025 LEARN MORE

The Tech Capital LATAM Finance Forum São Paulo - 03 July 2025 LEARN MORE

The Tech Capital APAC Finance Forum Singapore - 25 September 2025 LEARN MORE

infra/STRUCTURE Summit Las Vegas - 15-16 October 2025 LEARN MORE

The Tech Capital Middle East & Africa Finance Forum Abu Dhabi - 03 December 2025 LEARN MORE

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