Summary:
Oracle (Nasdaq: ORCL) and OpenAI are creating something massive in the desert outside Abilene, Texas.
Eric Bleeker of The AI Investor Podcast recently had the opportunity to get up close and personal with one of the most talked-about data centers in the world – Stargate. Stargate is a massive $500 billion investment for OpenAI that the company explains will support “the re-industrialization of the United States.”
Bleeker discussed his visit to Abilene, Texas during a recent episode of the podcast, and said the workers on the project actually call it “Project Ludicrous” because it is being built at a scale and speed unlike anything they have experienced. The site spans 11,000 acres, requiring 10,000 workers and an unending flow of heavy equipment just to maintain construction progress. When complete, the Abilene facility will deliver 1.2 gigawatts of capacity – roughly a quarter of what took decades to build in Northern Virginia.
Bleeker stresses that what is taking place in Abilene is only one of many similar developments underway, and compares the rise of data centers to what the world saw taking place at the start of the Industrial Revolution.
Smith reinforces just how staggering the scale is, noting that each center requires thousands of miles of cabling, intricate cooling systems, and vast racks of hardware that make the physical demands difficult to comprehend without seeing them. That is a key reason why so many investment opportunities exist.
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Transcript:
Eric Bleeker: I live where you used to live here as well, Northern Virginia. It’s commonly known as Data Center Alley. When you drive down out by Douglas especially, you just see data centers everywhere.
There’s about 50 million square feet of data centers in the area for perspective. That’s the same square footage of office space for the central business district of Seattle, which if you’ve been to Seattle, there are hundreds of towers and that is how much data-center space there is out in this semi-rural area outside Washington DC. Historically, it’s 20 to 25% of all data centers in the country, in this one small area and of the hyperscale data centers, I think it’s closer to 35%. So Austin, this is a very dominant area. It’s inescapable. And for all this dominance, there’s about five gigawatts of capacity in Northern Virginia.
So where I was going was Abilene and the construction project going there is the first phase of Stargate. Austin, a few fun facts for this. When I showed up, one of the first people I talked to said the workers on site call it Project Ludicrous. Now, the reason they call it Project Ludicrous is they’re building something 10 times bigger than anyone on the project has ever built, and they want to do it 10 times faster than they’ve ever worked on a project.
The site Austin is 11,000 acres. We drove around it repeatedly. It takes more than 20 minutes just to drive around the site. Every single day, 10,000 workers flood in and the entrance is a highway, but it’s a highway just for construction equipment.
Austin Smith: Amazing.
Eric Bleeker: At almost all hours, we saw dozens and hundreds per hour of heavy equipment trucks bringing in everything that needs to happen to build this data center. Austin, the final outcome is a 1.2 gigawatt data center in this one spot. You look at a map and there’s the town of Abilene nearby it, it looks like an entire district of the city. So I brought up this data center alley, how Northern Virginia’s identity is that it’s the data center capital of the world. And this one project, just one project is 25% the size. So Austin, I think there’s two things to appreciate here. I wanted to go down, I wanted to see this myself because the scope is just incredible and something you need to be able to see firsthand to really appreciate it. Austin, I think about when I think about what I was witnessing, you think about learning in school about the early 20th-century towns like Pittsburgh and Bethlehem, and these massive steel plants going to build this new economy. That we are going to have skyscrapers rising across cities in this 20th century American economy. What I felt as I was standing on the ground in Abilene was the birth of a new kind of factory, a 21st-century factory, because we are going to have these data centers rising across the country and they’re producing the new core of the 21st-century American economy.
And that’s really put a fine point of it, but this is the sort of transition that’s happening right now. This is the sort of economic transformation happening in real time. When you see this and second Austin, it feels like a gold rush. I mean, there’s no other way of putting it. Austin, this one data center is gonna cost $60 billion. But here’s the thing. In the Stargate project itself. Abilene’s just the first, but they’re building one in Shackleford, Texas. Milam County, Texas, Donia, Ana County, New Mexico, Lordstown, Ohio, port Washington, Wisconsin, and Austin. This is just for Stargate.
There’s also what XAI is doing Colossus, which is gonna be a similar size in Memphis. As you noted earlier. Meta is among their Hyperion campus in Louisiana, rural Louisiana that can expand to five gigawatts in one single data center the size of Manhattan. There’s gonna be the same capacity as Data Center Alley, the capital of data centers that was built over decades in DC happening in one single build.
Microsoft is building Fairwater, which is a multi-gigawatt project between Atlanta and Wisconsin. Amazon’s building a massive campus in Indiana. Anthropic is building a massive campus. Nebulus is building one, New York. Austin. I could go on and on and believe me, I’ve spent a lot of time categorizing all these and trying to get my arms around everything that’s happening right now. But the key idea here is if people think we’re on this kind of continuous slope up, it’s not, we’re on an exponential curve that’s right now in terms of the size of these data centers that what’s happening in Abilene is the first, but we’re about to see dozens, and when you build data centers this large, there’s new architectures.
And this is why I’m talking about with the Gold Rush. I watched those trucks go in dozens of them. I talked to everyone on this project, I would sit at the bar of the one nice hotel in town that literally everyone there was at this project, they’re all electrical engineers. They’re all a new kinds of picks and shovels that isn’t Nvidia chips.
How’d you power data centers this large Austin? How do you connect this many chips to work all at once when it’s this size? How do you link these data centers together? How do you create the cooling for these data centers? These are all ideas that are incredibly different than what was built two years ago. There’s new demands, there’s new companies that are gonna make a fortune from this, and that’s really the key.
So, Austin, I want to talk about, we talk about AI and the numbers and it’s easy just to be like, oh, another large number, another high growth rate. It’s another to be on the ground and see it happening because it is truly inspiring and it really hits home. What kind of transition. Today, like I said, these are not data centers anymore. These are 21st-century factories producing a new kind of economic good. So I’ll stop there. I know that’s a lot, but that’s why I went to Abilene.
Austin: I mean, when you put it that way, I don’t know how anybody could be anything other than excited here. And we’ve made this point in the past, so I’ll tread over it quickly. But that is one of the reason you carved out and interconnects and fiber optics portion of the portfolio so early. Because when you see things this size and you realize the thousands of miles of cabling that each individual center uses, it’s hard to grasp the scale of this, right? You see these buildings, you’re like, wow, that’s a really big building. And then you realize the tonnage of cabling, of chips of cooling that has to go in it, right? Cabling happens vertically. It happens horizontally. When you see one of these racks put together, I mean, an individual rack could have thousands of feet of cabling, and then you start to multiply that by the number of racks in a facility and the number of facilities you’re talking about, you almost have to start doing what you did where you go and drive around these projects and realize it took you 20 minutes to drive around one of them.
And then that there are dozens of projects like that. And then within each project there are these thousands of miles of cooling infrastructure, cabling infrastructure, just to start to appreciate the scale of it. So thank you for doing that. And the more we can find, I don’t know if you took any photos from your trip, but that might be a cool thing if there’s any opportunity to throw some up on the screen here so people can see what you saw. But to hear you describe it that way, I don’t know how people could be anything other than just inspired.
Eric Bleeker: Well, Austin, you think about too getting power to these data centers, a data center that’s 30 megawatts or something that you might see in the Northern Virginia area that’s gonna be a pretty stern grid connection. You look at the scale of these and realize this is fundamentally going to change the natural gas market.
There are dozens of downstream stock plays from this. As you noted, the cabling that happens, we’re moving from the largest models a couple years ago, being trained on thousands of chips working together to these hands of this size being a million. That’s what’s driving the optics boom right now. That’s what’s causing these levels of profits. You think about the cooling infrastructure maybe being in the order of millions of dollars for one of the old data centers and changing to billions for these. Once you start putting the numbers together, it really blows your mind.
It does. And that’s where we’ve been starting to adjust some of our investments for this kind of, where we see some of these trends coming in. Some of these, those stocks like a Tecogen, which is very speculative. Those recent, the thing is, as I was noting, a lot of this current build, as much as people think we’re at the end of a bubble, it’s just beginning. It really is. You see this, like I said, this is the first of this Stargate project in there. They’re gonna be built across the entire country. Once you see it firsthand and know that we are the first of this kind of gigawatt plus kind of data centers, and there’s more than a dozen on the drawing board about to happen in several that are larger, you realize that the kinds of revenue that’s gonna flow in if you are invested in the right types of companies.
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