Data center delay

Even an average Luddite reading the headlines can tell that the AI buildout is raking in investment dollars unlike anything we’ve seen in recent memory. In fact, new estimates from economist Stijn Van Nieuwerburgh and the Brookings Institution suggest that total investment in AI data centers and related infrastructure will top $10.3 trillion by 2032—the biggest financial bet in US history.

To put it in perspective, that translates to an astounding 3.6% of US GDP every year on average. Compare that to the US’s other outlays for infrastructure through the ages: Railroad spending confined between 1870 and 1890 constituted about 2.24% of GDP each year. Highways, if you look from 1956 to 1973, took just 1.13%. Electrifying the country in the early twentieth century? A measly 0.5%.

In other words, the AI infrastructure buildout is powering our economy, creating a cadre of new jobs (and billionaires) in the process. But given that the investment is built on debt, and often with little public reporting, it’s also stacking up serious risks—and any industry shakiness could spin out through the entire economy.

Oracle averts its eyes

Speaking of shaky: According to Bloomberg, Oracle is reportedly worried about its behemoth Project Jupiter data center campus, currently under construction in New Mexico, falling behind schedule. That’s why the computing company sent Project Jupiter’s developer a notice citing force majeure—which frees parties from their contractual obligations thanks to events beyond their control—in case the data center fails to go live by 2028 as planned.

Project Jupiter represents an estimated $165 billion buildout, with $18 billion of that being debt. Oracle trying to shield itself from a possible disaster doesn’t just project uncertainty for shareholders—it does the same for the rest of the AI trade and supply chain, and sends a stark warning sign about the economy overall. Investors are naturally backing off from Oracle shares, which dropped 3.46% today. Bloom Energy, which is set to power the project, sank 3.1% as well, and Blue Owl, which financed the buildout, lost 3.6%.

Google blasts off

Don’t worry, the AI trade’s not all doom and gloom. In more upbeat news, today Google announced a development that could take data centers off US soil—by shooting them into space. The frontier giant will launch a satellite into orbit next Thursday as part of Project Suncatcher, a sprawling effort to put data centers in space and power them with the sun’s energy.

While this launch won’t be a full data center—just a first-stage experiment to test its viability—the satellite will respond to simple AI queries as it operates for a year. It’s a welcome sign for investors as homegrown data centers draw controversy about land prices and energy usage. Though Google stock didn’t go to the moon, it did hop 1.2%.

What’s it all mean for markets?

The US economy is explicitly tied to the AI trade—for better or worse. While data centers in space are a fun distraction, if hyperscalers like Oracle are unable to deliver on their promises, it could spell disaster.

“The credit story in hyperscalers rests on a single consensus assumption, that operating cash flow triples from $600 billion to $2 trillion,” wrote Apollo Chief Economist Torsten Slok earlier this week. “If this doesn’t happen, then the risk is that the AI trade weakens, with credit spreads widening, capex plans getting cut, and ultimately US GDP growth slowing.”—GR