Alibaba’s chairman has raised concerns about a potential bubble in the AI data center sector. With global capacity growing at 19-22% annually and AI-specific demand surging at 33%, questions about sustainability are emerging. Data centers could consume 8% of U.S. power by 2030, requiring $50 billion in infrastructure. While the market may reach $157.3 billion by 2034, experts warn a painful correction might occur as growth stabilizes. The industry faces significant sustainability challenges ahead.
As demand for artificial intelligence explodes across industries, a modern gold rush is unfolding in the data center market. Alibaba’s chairman has recently raised concerns about whether this rapid expansion might be creating a dangerous bubble in the AI infrastructure sector.
The numbers tell a compelling story. Global data center capacity demand is projected to rise 19-22% annually from 2023 to 2030. AI-ready capacity demand is growing even faster at 33% annually. By 2030, generative AI could account for 40% of total data center demand.
Investment figures are equally staggering. Enterprise spending on generative AI reached $4.6 billion in 2024, an 800% increase from just one year ago. The AI software market is expected to hit $134.8 billion by 2025, growing at 31.1% annually.
This growth is driving unprecedented power consumption. Global data center power demand, estimated at 55 GW in 2024, could reach 84 GW by 2027. AI-related energy usage is forecast to grow at a remarkable 44.7% annually, reaching 146.2 TWh by 2027. Training a single large AI model can emit carbon equivalent to five cars over their entire lifetimes.
Infrastructure expansion is racing to keep pace. About 10 GW of new data center capacity is expected to break ground globally in 2025. Current racks use 40-130 kW of power, but future chips could push this to 250 kW per rack. Traditional raised-floor data centers are increasingly unable to handle these escalating power and cooling demands.
North America leads the market with over 40% share, with the U.S. AI data center market valued at $5.38 billion in 2024. The global market is projected to reach USD 157.3 billion by 2034, representing extraordinary growth from its 2024 valuation of USD 14.3 billion. Meanwhile, the Asia Pacific region is experiencing rapid growth at a projected 27.8% annual rate.
This expansion raises serious environmental concerns. U.S. data centers could consume 8% of the nation’s power by 2030, requiring utility companies to invest $50 billion in new infrastructure.
Major tech players are driving this boom. Cloud service providers like AWS, Google Cloud, and Microsoft Azure own more than half of the world’s AI-ready data center capacity.
With the AI accelerator market potentially reaching $500 billion, Alibaba’s chairman questions if this explosive growth is sustainable or heading for a painful correction.
