The massive-scale construction of data centres occurring worldwide\ncarries significant risks. An analysis from consulting firm Bain &\nCo warns that the AI industry needs to generate annual revenues of US$ 6\ntrillion, or approximately Rp 94,000 trillion, by 2031 for the capital\nalready invested to be proportionate to the returns.<\/p>\n
Otherwise, this entire giant investment risks becoming one of the\nlargest misallocations of funds in history, according to a report cited\nby Futurism. The analysis indicates that direct revenue from AI services\nis only expected to contribute about US$ 1.8 trillion towards that\ntarget. This leaves a deficit of US$ 4.2 trillion that must be sourced\nelsewhere. This enormous gap requires unprecedented technological\nbreakthroughs, even exceeding the impact brought by mobile phones and\ncloud computing in their respective eras.<\/p>\n
David Crawford, the lead author of the report and head of the\ntechnology practice at Bain, stated that infrastructure is being built\nfar ahead of actual demand. \u201cWhat this industry needs is a wave of\ninnovation far greater than what was ever brought by mobile phones and\ncloud computing,\u201d he said.<\/p>\n
To cover these construction costs, global economic growth must\nincrease by approximately 1 per cent every year from the AI sector\nalone. The question now is whether applications and benefits will arrive\nin time to recoup the massive capital injections.<\/p>\n
These concerns were first raised a year earlier by investor Harris\nKupperman of Praetorian Capital. He emphasised that equipment in data\ncentres has a short lifespan and must be replaced periodically. To cover\nreplacement and maintenance costs alone, the industry requires trillions\nof dollars in annual revenue. If not, the massive construction of\nhyperscale data centres will only exacerbate the situation.<\/p>\n
\u201cIf the math doesn\u2019t make sense, scaling it up won\u2019t fix it. It will\nonly turn an industry crisis into a national economic crisis,\u201d he\nremarked.<\/p>\n
Expenditures by tech giants such as Microsoft, Amazon, Meta, and\nOracle are expected to reach US$ 780 billion in 2026 alone. However, so\nfar, the revenue generated from AI has not been large enough to cover\nthese investments.<\/p>\n
Jessica Wachter, a finance instructor at the University of\nPennsylvania, warned that if this growth miracle fails to materialise,\nfuture generations will view the construction of these data centres as\nthe \u201clargest misallocation of capital in history.\u201d<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/data-centre-time-bomb-ready-to-explode-rp-94-000-trillion-at-risk-of-evaporating-1790920413", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }