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Mega-projects like the $500 billion Stargate supercomputing campus – a partnership between OpenAI, Oracle, and SoftBank – illustrate the ambition. AI capital spending is now estimated to account for nearly 2% of US GDP, approaching the scale of the 19th-century railroad boom.

Abroad, Washington is leveraging its technological edge to deepen geopolitical ties, with Trump brokering multibillion-dollar data center deals with the United Kingdom and the United Arab Emirates . US companies are also expanding partnerships with Norway and Japan to build a global AI infrastructure network anchored by an American tech stack.

However, this investment spree has raised concerns about a possible bubble. Analysts warn that the sector's speculative momentum and unclear business models echo the dot-com and telecom bubbles of the past.

The dominance of hyperscalers-cloud giants like Amazon Web Services, Google Cloud and Microsoft Azure-has raised antitrust and security concerns, with policymakers warning that their control of AI infrastructure creates systemic vulnerabilities.

The 2024 CrowdStrike update glitch that paralyzed global operations by disrupting Microsoft's cloud services exposed the risks of such single points of failure. Additionally, these mega data centers are exacerbating water insecurity issues in many local communities.

Despite concerns over market concentration, security risks and environmental costs, America's AI infrastructure development shows no sign of slowing. Unlike traditional infrastructure, AI data centers depreciate rapidly and require constant reinvestment to keep pace with advances in hardware and model design.

The result is an ecosystem heavily reliant on political backing, private capital and economies of scale-one that reinforces hyperscalers' dominance and embodies America's techno-capitalist push.

China's cooling AI data center boom

In the wake of ChatGPT's 2022 debut, Beijing made data centers a priority, prompting a wave of investment in“national computing hubs” across the country.

By 2024, more than 500 projects had been launched , from Inner Mongolia to Guangdong. Many were part of the“Eastern Data, Western Computing” initiative, which aimed to relocate data storage and processing from coastal cities to inland regions with cheaper land and more renewable energy.

For a time, AI infrastructure was seen as the next great economic driver, capable of offsetting a property market slump and slowing economic growth. But the release of DeepSeek shifted industry focus from training large models to inference–the process of deploying those trained models to generate results. China's new “AI+” initiative reflects this pivot to inference, aiming to accelerate AI commercial applications.

The earlier building spree has left Beijing with a hangover. By 2025, as much as 80% of China's new computing capacity, built through the government's push for data centers in 2022, reportedly sits idle.

President Xi Jinping has issued unusually blunt warnings against over-investment in AI, criticizing“neijuan” (内卷) or involution-a term describing wasteful, self-reinforcing competition and industrial overcapacity.

His statement appears to mark a significant change in China's stance. During a visit to France last year, Xi insisted that China faced no overcapacity problem.

The pullback on AI data centers reflects a disconnect between top-down industrial policy and actual market demand, compounded by technical setbacks caused by US export controls on cutting-edge chips. Many of China's data centers in its western regions were built for model training just as the demand shifted toward inference.

Conducting inference typically requires different hardware configurations – faster, more responsive chips that prioritize low latency and efficiency over sheer computational power. As a result, much of China's existing infrastructure is ill-suited to the application-oriented needs of its major eastern cities.

To address this gap, Beijing has announced plans to build an inference-focused data center in Wuhu, a southeastern prefecture, to serve major urban markets like Shanghai, Hangzhou, and Nanjing.