Data Center Boom May End Up Being 'Irrational,' Investor Warns

A prominent venture capitalist has warned that the technology industry's massive buildout of AI data centers risks becoming "irrational" and could end in disaster, particularly as companies pursue small nuclear reactors to power the facilities. Josh Wolfe, co-founder and partner at Lux Capital, compared the current infrastructure expansion to previous market bubbles in fiber-optic networking and cloud computing. While individual actions by hyperscale companies to build data center infrastructure remain rational, Wolfe said the collective effort "becomes irrational" and "will not necessarily persist." The warning comes as Big Tech companies pour tens of billions into data centers and energy sources, with Meta announcing just this week a deal to purchase power from an operating nuclear station in Illinois that was scheduled to retire in 2027. Wolfe said he is worried that speculative capital is flowing into small modular reactors based on presumed energy demands from data centers. "I think that that whole thing is going to end in disaster, mostly because as cliched as it is, history doesn't repeat. It rhymes," he said. Read more of this story at Slashdot.

Jun 5, 2025 - 15:08

Data Center Boom May End Up Being 'Irrational,' Investor Warns

A prominent venture capitalist has warned that the technology industry's massive buildout of AI data centers risks becoming "irrational" and could end in disaster, particularly as companies pursue small nuclear reactors to power the facilities. Josh Wolfe, co-founder and partner at Lux Capital, compared the current infrastructure expansion to previous market bubbles in fiber-optic networking and cloud computing. While individual actions by hyperscale companies to build data center infrastructure remain rational, Wolfe said the collective effort "becomes irrational" and "will not necessarily persist." The warning comes as Big Tech companies pour tens of billions into data centers and energy sources, with Meta announcing just this week a deal to purchase power from an operating nuclear station in Illinois that was scheduled to retire in 2027. Wolfe said he is worried that speculative capital is flowing into small modular reactors based on presumed energy demands from data centers. "I think that that whole thing is going to end in disaster, mostly because as cliched as it is, history doesn't repeat. It rhymes," he said.