Last year’s explosion in AI rippled across sectors but none as much as Tech, of course. I’m now seeing some retraction (perhaps, realism?) in the AI world. Basic questions about the ROI for AI started popping up late last year. Early this year, concerns about an AI bubble floated to the surface, as did cautions about overbuilding/overcapacity based on unrealistic business projections. Now, tariffs have thrown another monkey wrench into things and is the straw that broke the camel’s back for some (how many times do you see two animal-based colloquialisms in the same sentence, even if as awkward as this?). CFO Dive reported that Microsoft is slowing or outright stopping development of data center projects.
“‘In recent years, demand for our cloud and AI services grew more than we could have ever anticipated and to meet this opportunity, we began executing the largest and most ambitious infrastructure scaling project in our history,’ [Noelle Walsh, Microsoft president of cloud operations and innovation] wrote. ‘By nature, any significant new endeavor at this size and scale requires agility and refinement as we learn and grow with our customers. What this means is that we are slowing or pausing some early-stage projects.’
The pullback comes as Microsoft and other big tech companies face growing investor scrutiny over their heavy AI spending. It also comes as President Donald Trump’s on-again, off-again tariff measures are creating added pressure and uncertainty for tech executives.”
Projected energy demand for new data centers of mind-blowing proportions led major companies like Meta, Google, Microsoft and others to seriously explore alternative and renewable energy sources to feed the millions of servers. While most of those plans won’t put renewable power back into the grid for others to use, there was a benefit beyond just the data centers: tech companies were to invest in and develop new energy technologies, including small nuclear power plants, that could then be used more broadly – having a larger social impact.
If we see a large scale pullback in AI projects, that may not pan out as anticipated.
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