Tiny banana, based on the article below
Are We Building Lasting Value or the World’s Most Expensive Bubble?
Martijn Veldkamp
“Strategic Technology Leader | Customer’s Virtual CTO | Salesforce Expert | Helping Businesses Drive Digital Transformation”
October 24, 2025
The AI infrastructure boom is not an abstract headline to me. It’s hitting close to home. Here in the Netherlands, close to where I live. Microsoft has acquired 50 hectares for a new data center, with the CEO citing 300,000 customers who “want to store their data close by in a sovereign country.” This is at Agriport where there are two datacenters already (Microsoft and Google) which were recently in the news that, oopsie, we consume more water and power then we said in our initial plans.
The local impact is pretty bad. This planned buildout is consuming so much power and water from the grid that it’s halting the construction of new businesses and even houses for young people in the surrounding villages. There is a report that mentions a striking change in an environmental vision (omgevingswet), which made extra building land available on which new data centers could be built. This was based on a map that, according to the researchers of Berenschot, was of poor quality, was poorly substantiated and whose origin could not be traced.
It’s made me step back and question the drivers behind this relentless push for more datacenters.
Is This the Right Path to Better AI?
The current building and investing frenzy is built on a two beliefs: that adding more compute power will inevitably lead to better, perhaps even superintelligent, AI. And two, that the big tech companies cannot lose this AI war. OpenAI’s Sam Altman is reportedly aiming to create a factory that can produce a gigawatt of new AI infrastructure every week.
Yet, a growing group of AI researchers is questioning this “scaling hypothesis,” suggesting we may be hitting a wall and that other breakthroughs are needed. This skepticism is materializing elsewhere, too. Meta, a leader in this race, just announced it will lay off roughly 600 employees, with cuts impacting its AI infrastructure and Fundamental AI Research (FAIR) units.
The Bizarre Economics of the race to build more
In earlier decades, datacenter growth was a story of reusing the leftovers of older industries. Repurposing the power infrastructure left over from an earlier era, like old steel mills and aluminum plants.
Today, we’re doing it again. Hyperscalers are building from datacenters at a massive scale, competing for everything that leads to a datacenter, from land to skilled labor to copper wire and transformers, leading to plans to build their own powerplants. The economics are astounding.
Why do I say that? Datacenters also depreciate, not as fast the nVidia chips, but still. Are we sure we are not building the new leftovers like the old steel mills?
FOMO, Negative Returns, and the Bubble Question
We now have megacap tech stocks, once celebrated as “asset-light”. They are spending nearly all their cash flow on datacenters. Losing the AI race is seen as existential. This means all future cash flow, for years to come, may be funneled into projects with fabulously negative returns on capital. Lighting hundreds of billions of dollars on fire instead of losing out to a competitor, even when the ultimate prize is unclear.
If this turns out to be a bubble, what lasting thing gets built? The dot-com bubble left me with a memory of Nina Brink and the World Online drama. But if the AI bubble pops, 70% of the capital (the GPUs) will be worthless in 3 years. We’ll be left with overbuilt shells and power infrastructure. Perhaps the only lasting value will be a newly an industrialized supply chain for ehhh.
What’s your take? Are we building the next industrial revolution or the world’s most expensive, short-lived infrastructure?
