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When Lee told me that BlackRock, Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and OpenAI had pooled $40 billion to purchase data centers, it stopped me cold. That’s not just a headline deal — it’s a declaration that the world’s most powerful capital and AI players see exponential expansion ahead for cloud infrastructure.
The Biggest Names in Tech Are Buying Capacity, Not Just Computing Power
Lee pointed out what this means: these firms are no longer content to rent or co-locate, they’re buying the physical backbone of the AI revolution. The fact that four of the most dominant forces in finance and technology have joined forces signals a shared recognition that data center capacity is becoming the next oil field.
Their collective bet implies that global cloud and AI compute demand is outpacing current infrastructure at an unprecedented rate. Even for companies of this scale, $40 billion isn’t a rounding error: it’s conviction.
Could Consolidation Ripple Across the Industry?
Lee and I both wondered who’s next. Giants like Digital Realty and Equinix, longtime pillars of the data center world, could become prime takeover targets as hyperscalers race to lock in space, power, and cooling capacity. If this acquisition triggers a domino effect, we could see a reordering of the data center market into a few mega-consolidated networks — controlled by tech, financed by Wall Street, and powered by increasingly scarce electricity.
The Power Problem Behind the Expansion
As I noted, CNBC recently reported that utilities are struggling to track true demand. Data center developers now “shop” among power providers, creating what analysts call shadow demand. One utility might receive ten inquiries but only one actual contract, yet each must plan as if all ten will materialize.
The result? Utilities risk overbuilding, companies risk overpaying, and the grid itself risks being overstressed. Lee made the point that this could push data center construction further toward regions with abundant natural gas, like the Dakotas and Texas, where builders can colocate with energy supply instead of waiting for transmission upgrades.
What Comes Next
As Lee put it, this deal could mark either the beginning of the end or the end of the beginning for the data center boom. Either way, the race for AI infrastructure has entered a new phase — one defined by scale, strategy, and staggering sums of capital.
Transcript:
[00:00:04] Douglas: Lee, one of the things we’re seeing in the world of AI is these massive alliances, you know, where different companies form partnerships and they,
[00:00:14] Douglas: everybody brings of their expertise to the thing and together.
[00:00:20] Douglas: An alliance, it’s not always clear who gets what from whom and who put what in, but you’ve got one, you just, you got one that just came out.
[00:00:28] Lee Jackson: Boy, do I ever, I mean, when you get, okay, and I’m gonna have to, I’m gonna read these off to you, Doug. When you get BlackRock (NYSE: BLK), who’s clearly has more dough than anybody in the world, Nvidia, Microsoft, and OpenAI to all chip in $40 billion to buy aligned data centers. That shows you that. The demand for cloud computing and data center storage.
[00:00:58] Lee Jackson: And, and retrieval and all of that has got to be, they see it to be exponentially much, much bigger than we can see it right now. Or why would they go in and spend $40 billion to buy this? And I think it’s, I think it’s pretty provocative because it’s, it’s like all four major partners in the industry who have been very happy to just do circular financing is now, we have now deemed it to be that they’re gonna combine.
[00:01:26] Lee Jackson: To have this capacity for, for cloud computing and, and all the above. But $40 billion is a big chunk of d even for those kind of major players. And it’s interesting. Will we see more of this? Will we see, um, other data center providers? And there’s big ones, you know, there’s super big ones and, you know, digital realty people like that.
[00:01:49] Lee Jackson: Will, will somebody go in and make a big play for them? Or somebody you know of that size and scope. I think it’ll be interesting to see if this expands and there’s more data center purchases, you know, as we head down the road.
[00:02:04] Douglas: This has gotten to be such a big deal that if you called me up tomorrow and said to me that Microsoft bought Duke Energy there’s, or Constellation, it’s, this is crazy enough now, so that you could actually see a consolidation based on an based on ownership scheme. If I’ve got, if I’ve got the technology and you’ve got the infrastructure, maybe I should just buy you.
[00:02:31] Lee Jackson: Absolutely. And I don’t think, you know, and as we’ve discussed, you know, you’re not gonna build any small scale nuclear reactors. Anytime soon. And the approval process, you know, could take forever. Although I’m sure they could help speed it up ’cause we’re gonna need it for the national power grid ’cause we’re gonna need it.
[00:02:49] Lee Jackson: But yeah, I think, I think that’s true. And you know, there’s big players like digital and Equinix and people like that, you know, that have been in the business forever, you know, from, you know, startup, you know. In, in that industry. And it’s interesting to focus on, well, will they continue to build more or will people continue to consolidate that industry?
[00:03:15] Lee Jackson: Because again, the question is, is it getting away from itself as well? Are we building too many data centers? I don’t think so because the demand is just never ending. But boy, it, there’s gonna be a point. I think when, and, and we’ve had this discussion where data center usage and power usage is gonna, there, there’s gonna be an issue here at some point, and that’s why most of these people are trying to desperately to find a way.
[00:03:43] Lee Jackson: That’s why they’re building data centers in North Dakota and South Dakota because of the, the big, um, you know, oil, uh. Fields up there, and that’s why they’re building them in Texas. That’s why they’re building them out in the Permian and out there. And so it’s like, okay, if we can’t bring the electricity to us, we’ll go to where the gas, the natural gas is, and we’ll build our own.
[00:04:05] Douglas: Well that’s an option. It’s funny, CNBC did a, an article today and it’s, it’s, it’s based on a, see your own shadow premise. the people looking for data centers are shopping around the utilities. So if I’m gonna build a data center, I may call 10 utilities try to. happening is the utilities are now getting confused about how many data centers they might be. Because if, if you call me and it’s just, I’m the one utility and you’re the one person who wants a data center, that’s easy to count, right? One
[00:04:42] Douglas: guy called me about one data center, but if I’m the utility in 10 data centers call me ’cause they’re shopping around and you say to me, do a forecast. I want you to forecast for me how many data centers we’re gonna have to support.
[00:04:57] Douglas: It’s like, well. 10 guys called me, but if I don’t get any of them? Or what if I get all 10? So
[00:05:06] Lee Jackson: absolutely.
[00:05:07] Douglas: A capacity calculation problem which actually has the chance of me being that you’ll have overbuilding It
[00:05:15] Douglas: It could be
[00:05:16] Douglas: that people have phone calls
[00:05:18] Douglas: that they think,
[00:05:18] Douglas: well, I’ll, I’ll build because I’m gonna get five of the 10.
[00:05:22] Douglas: The next utility of the town over does the same thing. Town over there is a, there is a situation scenario, as they say, where you could have overbuilding based on shadow demand, is they asked me, so it must mean that they’ve picked me.
[00:05:43] Lee Jackson: And the thing that will be interesting to see, I I if, if we do over build, which typically you know, has happened in the United States for, you name it, what do you do with empty data centers, with racks and racks and racks of servers and computers and
[00:06:01] Douglas: there’ll be a comeback of beef the US and if that happens, we’ll just pull out the racks and turn ’em into huge barnyards. That’s about all. Listen, at least we know they have to be close to water for cooling.
[00:06:16] Douglas: Know that they’ll get some electricity, so we need to keep the lights on for the cattle.
[00:06:21] Lee Jackson: Yeah,
[00:06:21] Douglas: There’ll be water for the cattle ’cause they’ll be located, they’ll have access to water and we’ll have some electricity. And we can use it. We can use them basically as huge farm.
[00:06:32] Lee Jackson: Well, I think this deal is either the beginning of the end or the end of the beginning. You know, I don’t know what it is for the data center wave and, and, and data center building and data center construction, but we’ll find that out soon enough.
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