Holy shit. Bloomberg just verified one of my biggest scoops - that Microsoft only has 2gw of operational capacity. I had it at 1.993GW in prep for the story that [@aishadown.bsky.social](https://bsky.app/profile/did:plc:pazzytppogqe26vbcux5u2dx) and I did for the guardian. Vindication!
[www.theguardian.com/technology/2...](https://www.theguardian.com/technology/2026/aug/17/are-microsofts-ai-plans-being-held-back-by-a-shortage-of-chips)
Basically the same situation as with defense contractors I bet. All sorts of subcontractors take the money, turn around and either pay other subcontractors, or do as little as possible with it to be able to keep making more.
That’s how you turn 300 billion of investment into 30 billion of revenue! Capitalism works SO WELL!
There is some of that. A lot of these companies actually are trying to move fast and do most of the buildout efficiently. But there is always a bottleneck like getting grid power or some piece of hardware that is in short supply. The crazy thing is that even with a bunch of construction projects stalled at some critical point, they just keep buying & stockpiling basic AI hardware (AI chips, RAM,…) and starting new datacenter construction anyway.
In their mind, it’s fine to keep spending, so long as they are still standing at the end. But if they stop spending now, it would only send the signal that they lost confidence in the spend so far and that would instantly tank them in the eyes of everyone, thus fulfilling the prophecy of failure that they must know is looming over all of this.
So the only way any of them will stop is if one of them dies first. At that point, it may be possible to change the narrative towards it being smart to hedge your bets on this whole AI thing a bit.
maybe the ai isn’t the point. openai is dependent on microsoft azure credits (last i heard, anyway) and microsoft owns something like 40% of the company anyway. i think this might have been ed zitron’s own observation but it seems as though the ai is an easy way for microsoft to get a bunch of cheap datacenters while hedge funds and r/wallstreetbets morons foot the bill. if that’s the case, the recent IPO and associated uptick in ads might be an early indicator.
this is some real liz from truanon thinking, i mean that in a positive way. The mechanisms of high capital money flow are made purposefully opaque and very few people are watching them, but they determine a lot of the material conditions we have to deal with
for microsoft to get a bunch of cheap datacenters while hedge funds and r/wallstreetbets morons foot the bill
These AI data centre builds are packed with specific high power GPUs that are only useful for vector multiplication for AI, or mining cryptocurrency. To reduce overhead, they have kept non-GPU components to a minimum, because this lets you have more GPU processing per gigawatt. These data centres cannot be used for anything general purpose. General purpose computing needs CPUs, which they stocked as few of as possible.
is that necessarily a dealbreaker? GPUs are way overpriced right now because these AI companies control huge chunks of the supply. when openai goes kaput microsoft is gonna have control of both chatgpt and copilot and with it, a huge chunk of the used gpu market. if i’m not missing something huge, that could put them in a great position to absorb the demand from the ai bubble’s burst and unload the extra cards at whatever pace they want. plus i have no idea what the rest of the GPU compute market looks like. i assume if there’s a lot of demand then AWS wouldn’t be able to absorb much of it, and google cloud not as much as microsoft. obviously i’ve gotten way out of my depth here so i guess this is more of a question than a statement
Lol they managed to take 3000 billion, or 3 trillion if you number, and turn it into 30 billion revenue through. So actually significantly worse than you say.
Yea that checks out. Microsoft alone is at about 300 billion, the whole invest by all companies actually making AI or stuff for AI is estimated between 2 and 3 trillion, depending where you want to do the cutoff.
Basically the same situation as with defense contractors I bet. All sorts of subcontractors take the money, turn around and either pay other subcontractors, or do as little as possible with it to be able to keep making more.
That’s how you turn 300 billion of investment into 30 billion of revenue! Capitalism works SO WELL!
There is some of that. A lot of these companies actually are trying to move fast and do most of the buildout efficiently. But there is always a bottleneck like getting grid power or some piece of hardware that is in short supply. The crazy thing is that even with a bunch of construction projects stalled at some critical point, they just keep buying & stockpiling basic AI hardware (AI chips, RAM,…) and starting new datacenter construction anyway.
In their mind, it’s fine to keep spending, so long as they are still standing at the end. But if they stop spending now, it would only send the signal that they lost confidence in the spend so far and that would instantly tank them in the eyes of everyone, thus fulfilling the prophecy of failure that they must know is looming over all of this.
So the only way any of them will stop is if one of them dies first. At that point, it may be possible to change the narrative towards it being smart to hedge your bets on this whole AI thing a bit.
maybe the ai isn’t the point. openai is dependent on microsoft azure credits (last i heard, anyway) and microsoft owns something like 40% of the company anyway. i think this might have been ed zitron’s own observation but it seems as though the ai is an easy way for microsoft to get a bunch of cheap datacenters while hedge funds and r/wallstreetbets morons foot the bill. if that’s the case, the recent IPO and associated uptick in ads might be an early indicator.
this is some real liz from truanon thinking, i mean that in a positive way. The mechanisms of high capital money flow are made purposefully opaque and very few people are watching them, but they determine a lot of the material conditions we have to deal with
These AI data centre builds are packed with specific high power GPUs that are only useful for vector multiplication for AI, or mining cryptocurrency. To reduce overhead, they have kept non-GPU components to a minimum, because this lets you have more GPU processing per gigawatt. These data centres cannot be used for anything general purpose. General purpose computing needs CPUs, which they stocked as few of as possible.
is that necessarily a dealbreaker? GPUs are way overpriced right now because these AI companies control huge chunks of the supply. when openai goes kaput microsoft is gonna have control of both chatgpt and copilot and with it, a huge chunk of the used gpu market. if i’m not missing something huge, that could put them in a great position to absorb the demand from the ai bubble’s burst and unload the extra cards at whatever pace they want. plus i have no idea what the rest of the GPU compute market looks like. i assume if there’s a lot of demand then AWS wouldn’t be able to absorb much of it, and google cloud not as much as microsoft. obviously i’ve gotten way out of my depth here so i guess this is more of a question than a statement
Lol they managed to take 3000 billion, or 3 trillion if you number, and turn it into 30 billion revenue through. So actually significantly worse than you say.
Did I miss a zero? Where’s your number from, I am curious?
I think maybe I’m referring to the entire industry investing in AI, and you’re just talking about Microsoft’s investment?
Yea that checks out. Microsoft alone is at about 300 billion, the whole invest by all companies actually making AI or stuff for AI is estimated between 2 and 3 trillion, depending where you want to do the cutoff.