Invisible datacentres and capricious chips: is UK’s AI bubble about to burst?

## Summary
Illustration: Anais Mims / Guardian Design/Getty View image in fullscreen If the cracks in the datacentre boom widen, the entire AI bubble could burst in a replay of the 2001 dotcom crash. Datacentre investment boom is one of the biggest infrastructure gambles of this era, and Britain may be uniquely exposed Stargate was to be the world’s biggest AI investment: a $500bn infrastructure project to “secure American leadership in AI”. If the cracks in this datacentre boom widen, consequences range from Britain ending up without the AI infrastructure it needs to keep up in the global economy to the more grave risk that the entire AI bubble bursts in a replay of the 2001 dotcom crash that could knock the world economy sideways. “There has been a lot of blind optimism around the buildout of AI infrastructure,” said Andy Lawrence, the executive director of research at the Uptime Institute, which inspects and rates datacentres. “While there is an incredible boom under way, with construction at a scale that’s never been seen before – it has also been apparent for quite a while that many projects would either not go ahead, or would take a lot longer to build and begin operating than many of the claims suggested. We take a conservative approach to our financing, aligned to long-term infrastructure buildouts.” Alvin Nguyen, an analyst at Forrester, said: “The people who are loaning the money, the financial institutions, they’re taking on so much more risk because there is a lifespan to the chips.” The datacentre investment boom represents one of the biggest infrastructure gambles of this or any era.

## Article Content
If the cracks in the datacentre boom widen, the entire AI bubble could burst in a replay of the 2001 dotcom crash.
Illustration: Anais Mims / Guardian Design/Getty
View image in fullscreen
If the cracks in the datacentre boom widen, the entire AI bubble could burst in a replay of the 2001 dotcom crash.
Illustration: Anais Mims / Guardian Design/Getty
Invisible datacentres and capricious chips: is UK’s AI bubble about to burst?
Datacentre investment boom is one of the biggest infrastructure gambles of this era, and Britain may be uniquely exposed
Stargate was to be the world’s biggest AI investment: a $500bn infrastructure
project
to “secure American leadership in AI”. Never shy of hyperbole, its key backer, the ChatGPT-maker OpenAI, promised “massive economic benefit for the entire world” with facilities to help people “use AI to elevate humanity”.
Now, OpenAI
appears
to be dropping out of a part of the deal – the expansion of a flagship datacentre stretching across a swathe of land in Abilene, Texas, which has become one of the most visible manifestations of a frenzy of investment in the chips and power plants required to build and run AI. There has been a breakdown in negotiations over project financing, as well as the timeline of when the expanded capacity might come online.
This may be fine for OpenAI; it can presumably find other datacentres. It is less fine for OpenAI’s partner on the project, Oracle, which has already spent billions on hardware for the site. It is one of a number of cracks appearing in the capital side of the AI economy that are making investors rather nervous.
Both companies
have
said
the development will not derail their AI plans. They also said that a month ago, when a different $100bn
deal
melted down between OpenAI and Nvidia, the world’s biggest maker of the chips that train AI models and respond to the billions of questions people ask them daily.
The fate of such deals for the global economy is only increasing in importance. Future datacentre leases agreed by the largest cloud computing companies (including Amazon, Oracle and Microsoft) are up nearly 340% in two years and now top $700bn, according to Bloomberg. It is a lot of money if the technology does not start delivering on its promise to supercharge economic productivity. On Friday, more than three years since the launch of ChatGPT unleashed the AI hype, the UK
reported
zero GDP growth for January.
View image in fullscreen
Sam Altman, the chief executive of OpenAI, the maker of ChatGPT.
Photograph: Bloomberg/Getty Images
On Monday,
the Guardian exposed
another fissure in the AI edifice. An investigation found the UK’s flagship AI deals, many announced with great fanfare during Donald Trump’s state visit last September, are not as they were described in government and corporate press releases. Key projects are delayed or improbable, crucial “investments” are in fact vague agreements between mostly US tech companies, desperately being spun by ministers as an engine for economic growth.
If the cracks in this datacentre boom widen, consequences range from Britain ending up without the AI infrastructure it needs to keep up in the global economy to the more grave risk that the entire AI bubble bursts in a replay of the
2001 dotcom crash
that could knock the world economy sideways.
“There has been a lot of blind optimism around the buildout of AI infrastructure,” said Andy Lawrence, the executive director of research at the Uptime Institute, which inspects and rates datacentres. “While there is an incredible boom under way, with construction at a scale that’s never been seen before – it has also been apparent for quite a while that many projects would either not go ahead, or would take a lot longer to build and begin operating than many of the claims suggested. Because of the high stakes and high rewards in AI, it has attracted speculators who promise investment but have little experience in the sector.”
Most emblematically, the Guardian’s investigation featured a site in Loughton, Essex, that the government
said
would host “the largest UK sovereign AI datacentre” by the end of 2026. The then technology secretary, Peter Kyle, called it “a fresh start for our economy and for working people”. A year later it was still being used as a scaffolding yard with almost zero chance of being open when billed. After the Guardian’s investigation, Nscale confirmed it had bought the land on which the computer is to be built – eight months after it
said it did
in January 2025. It still does not have planning permission but said on Friday it was planning to start construction before July and would switch on the datacentre between April and July 2027.
View image in fullscreen
The site of the proposed datacentre in Essex, pictured in February.
Photograph: Martin Godwin/The Guardian
The rickety AI deals have come amid a tightening embrace between US tech corporations and senior politicians in the US and UK. Donald Trump’s top AI advisers include Da

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## Expert Analysis

### Merits
- Never shy of hyperbole, its key backer, the ChatGPT-maker OpenAI, promised “massive economic benefit for the entire world” with facilities to help people “use AI to elevate humanity”.
- He replied: “The time that it will be live will be the time we have approved with our customer.” Narayan, meanwhile, defended the broader pace of progress. “What we are saying is that we’re making concerted progress,” the minister told CityAM . “We have live datacentres in Lanarkshire already.

### Areas for Consideration
- If the cracks in this datacentre boom widen, consequences range from Britain ending up without the AI infrastructure it needs to keep up in the global economy to the more grave risk that the entire AI bubble bursts in a replay of the 2001 dotcom crash that could knock the world economy sideways. “There has been a lot of blind optimism around the buildout of AI infrastructure,” said Andy Lawrence, the executive director of research at the Uptime Institute, which inspects and rates datacentres. “While there is an incredible boom under way, with construction at a scale that’s never been seen before – it has also been apparent for quite a while that many projects would either not go ahead, or would take a lot longer to build and begin operating than many of the claims suggested.
- We take a conservative approach to our financing, aligned to long-term infrastructure buildouts.” Alvin Nguyen, an analyst at Forrester, said: “The people who are loaning the money, the financial institutions, they’re taking on so much more risk because there is a lifespan to the chips.” The datacentre investment boom represents one of the biggest infrastructure gambles of this or any era.

### Implications
- If the cracks in the datacentre boom widen, the entire AI bubble could burst in a replay of the 2001 dotcom crash.
- Illustration: Anais Mims / Guardian Design/Getty View image in fullscreen If the cracks in the datacentre boom widen, the entire AI bubble could burst in a replay of the 2001 dotcom crash.
- Datacentre investment boom is one of the biggest infrastructure gambles of this era, and Britain may be uniquely exposed Stargate was to be the world’s biggest AI investment: a $500bn infrastructure project to “secure American leadership in AI”.
- There has been a breakdown in negotiations over project financing, as well as the timeline of when the expanded capacity might come online.

### Expert Commentary
This article covers datacentre, chips, openai topics. Notable strengths include discussion of datacentre. Areas of concern are also raised. Readability: Flesch-Kincaid grade 0.0. Word count: 1664.