Electric Feel
Everybody’s just vibing until the Zuck walks in and buys a third of a utility’s power generation capacity
Big 4 hyperscalers building AI factories spent over $200 billion on CapEx the past 12 months, a $65 billion increase vs last year.
AI requires a new category of gigawatt-scale datacenters, and everyone is scrambling to find enough power for these beasts.
Among the gigawatt AI factories I found, Meta stands out with reported plans to consume up to 30% of Entergy Louisiana’s power generation.
The “Big 4” hyperscalers (Amazon, Google, Microsoft, Meta) have stepped up CapEx a lot in 2024. I’m estimating the Big 4 spent an incremental $65 billion over the past 12 months relative to the prior TTM period.
We could spend weeks discussing where this money is going and how long this investment cycle could last, but the core driver has been the build-out of AI data centers - or “AI factories” as the media has gleefully described these very large and energy intensive data centers.
Oracle founder Larry Ellison recently said the frontier AI model game has a $100bn entry price:
When I talk about building gigawatt or multi-gigawatt datacenters, I mean, these AI models, these frontier models are going to – the entry price for a real frontier model, from someone who wants to compete in that area, is around $100 billion.- Larry Ellison, Oracle Q1 2025 Earnings Call
What’s in Fred’s Rotation Today
AI data centers are often described in terms of their energy needs. Today you will read about “gigawatt-scale” data centers, which describes a completely new class of infrastructure being built to house vast clusters of GPUs.
Each GPU server consumes tremendously more electricity than similarly sized CPU-based infrastructure. This is why I talk about energy density of GPU datacenters - the same physical space containing GPU infrastructure needs a LOT more power than traditional servers.
I put together a brief summary of a few of the gigawatt-scale projects I found:
PowerHouse Data Centers: PowerHouse, a joint venture between American Real Estate Partners (AREP) and Harrison Street, is planning an 800 MW campus in Spotsylvania, Virginia
Sam Altman is reportedly searching for backers (and power sources) for seven 5 GW datacenters, which are likely related to the Stargate data center partnership between OpenAI and Microsoft
ECL (the data center startup, not the water treatment company) announced plans to build a 1GW “AI factory” at ECL TerraSite-TX1, a 600+ acre site near Houston. ECL plans to begin with a $450mn / 50 MW site to support Lambda Labs and then invest a modest ~$8bn to build the rest of the datacenter.
Oracle is in the process of expanding 66 existing cloud data centers and building 100 new cloud data centers, including one planned datacenter Larry Ellison said is "north of a gigawatt" and will use three small modular nuclear reactors for power
And then there’s Facebook.
Entergy Louisiana announced on its Q2’24 earnings call two very interesting data-points:
It signed a new electric service agreement with a large new customer facility in north Louisiana; and
That it filed an application with the Louisiana Public Service Commission (LPSC) seeking three new combined cycle combustion turbine generation resources totaling 2.3 GW, along with a new 500 kV transmission line, and 500 kV substation upgrades.
Since this earnings call, Axios and local news reported that Facebook parent company Meta is the customer behind this major datacenter build out in Northern Louisiana.
Meta’s project was reportedly filed under the name “Project Sucre” and will cost between $5bn - $10bn. According to reporting by Nola, Meta’s new data center campus could draw ~30% of Entergy Louisiana’s generation capacity.
I think it’s really notable that Entergy Louisiana is Meta’s partner for this project considering nuclear accounts for ~30% of its projected 2024 power sources - double the Louisiana state average of 15%.
A $5bn - $10bn data center sounds like a massive investment, but it also could be peanuts in comparison with Microsoft and OpenAI’s reported plans to co-build a $100bn data center under the codename Stargate.
I love writing about these tech and energy topics, and I could keep writing about gigawatt data centers for weeks. But I think the most important question today, in this market, is how all of the Zuckerberg memes went from this
And this
To this??
