Venture capitalist Chamath Palihapitiya highlighted energy constraints as the primary barrier to artificial intelligence expansion, responding to concerns about Meta Platforms Inc. (NASDAQ:META) facing infrastructure bottlenecks despite massive capital expenditure plans.
Energy Emerges as AI’s Greatest Challenge
Palihapitiya wrote on X Wednesday that “Energy is the big bottle neck for AI,” outlining systemic constraints facing the industry. The venture capitalist detailed how physical and software AI require fundamental recipe changes beyond ingredient modifications.
“We need infinite and marginally costless energy,” Palihapitiya stated, emphasizing solar plus storage as the only viable near-term solution given 12-17 month deployment timelines.
Meta’s Infrastructure Financing Strategy
Meta CFO Susan Li revealed the company may seek external financing for 2026 AI infrastructure as capital expenditures approach $100 billion. During the second quarter of 2025 earnings, Li said Meta is “exploring ways to work with financial partners to co-develop data centers.”
The company posted $47.52 billion in the second-quarter revenue, beating analyst expectations of $44.58 billion. Capital expenditures reached $17.01 billion with full-year guidance of $66-72 billion.
Industry-Wide Infrastructure Race Intensifies
New Era Funds Chief Investment Officer Rihard Jarc highlighted that even with $100-150 billion budgets, companies cannot spend due to equipment constraints. “Schneider Electric is completely booked until 2030,” Jarc wrote, highlighting supply chain bottlenecks.
Microsoft Corp. (NASDAQ:MSFT) projected $30 billion in first-quarter capex, while Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) raised 2025 spending to $85 billion.
Power Demand Projections Signal Crisis
Goldman Sachs projects global data center demand growing 50% by 2027, from 62 GW to 92 GW. AI workloads will account for 28% of usage by then.
By 2030, data center power demand could climb 165%, making the sector among the world’s top 10 electricity consumers.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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