The AI Industry Is Lying to You

Summary

Hi! If you like this piece and want to support my independent reporting and analysis, why not subscribe to my premium newsletter? It’s $70 a year, or $7 a month, and in return you get a weekly newsletter that’s usually anywhere from 5000 to 18,000 words, including vast, detailed analyses of NVIDIA, Anthropic and OpenAI’s finances, and the AI bubble writ large. I just put out a massive Hater’s Guide To The SaaSpocalypse, as well as the Hater’s Guide to Adobe. It helps support free newsletters like these! The entire AI bubble is built on a vague sense of inevitability — that if everybody just believes hard enough that none of this can ever, ever go wrong that at some point all of the very obvious problems will just go away.Sadly, one cannot beat physics.Last week, economist Paul Kedrosky put out an excellent piece centered around a chart that showed new data center capacity additions (as in additions to the pipeline, not brought online) halved in the fourth quarter of 2025 (per data from Wood Mackenzie): Wood Mackenzie’s report framed it in harsh terms:US data-centre capacity additions halved from Q3 to Q4 2025 as load-queue challenges persisted. The decline underscores the difficulties of the current development environment and signals a resulting focus on existing pipeline projects. While Texas extended its pipeline capacity lead in Q4 2025, New Mexico, Indiana and Wyoming saw greater relative growth. Planned capacity continues to be weighted by new developers with a small number of massive, speculative projects, targeting in particular the South and Southwest. New Mexico owes its growth to a single, massive, speculative project by New Era Energy & Digital in Lea County. As I said above, this refers only to capacity that’s been announced rather than stuff that’s actually been brought online, and Kedrosky missed arguably the craziest chart — that of the 241GW of disclosed data center capacity, only 33% of it is actually under active development:The report also adds t...