Analysts ponder whether big tech is 'overbuilding' as AI infrastructure projects accelerate

Even if data center compute demand falls short of current projections, it still won't be easy for power suppliers to keep up, according to analysis from McKinsey.

With AI infrastructure projects continuing at a rapid pace, the consultancy anticipates that around 75% of power demand growth across the US in the next decade will come from data centers.

Based on current expansion rates, this will require the "equivalent of almost 30 GW of power per year”.

"Whether that growth materializes depends on whether demand for AI compute will last. Several indicators suggest that it will,” the consultancy noted.

In the short term, McKinsey a shortfall is likely in the US. But future demand is hard to predict, with parts of the AI ecosystem exhibiting bubble-like characteristics.

More than half of 2025's new unicorns are AI-focused, including several multibillion-dollar firms without commercialized products. Meanwhile, some AI-native players and infrastructure intermediaries are pursuing aggressive expansion, despite high leverage or negative cash flow.

Broader macroeconomic and geopolitical factors such as tighter capital markets, elevated power prices, or supply chain disruptions could also dampen demand and slow the pace of data center build-outs.

Concerns over compute capacity and infrastructure run counter to current trends in the industry, McKinsey noted, particularly in terms of concrete use-cases. Most organizations deploying AI are reporting good results, the consultancy noted, and there’s no sign of an imminent technological plateau when it comes to LLMs.

"Investments are increasingly tied to contracted capacity utilization and concentrated among scaled, investment-grade data center operators — factors that point to durable, committed growth rather than speculation," the firm said.

"Finally, demand is anchored by sophisticated, well-capitalized hyperscalers, whose capital spending has grown approximately 50 percent annually from 2022 to 2026 while maintaining strong margins and cash flow."

Infrastructure misalignment

McKinsey warned that at the current pace of growth, there's a misalignment between where stakeholders want to build data centers and where generation, energy demand, and grid infrastructure can quickly scale - raising the possibility of energy supply problems in parts of the US.

McKinsey's model suggests data center power demand could grow by around 27% annually between now and 2030, reaching 121 GW of data center IT demand.

However, it looks likely to grow more slowly after that, thanks to a potential saturation in demand for chips and slower AI adoption, as well as a shift from building new data centers to replacing today’s components with more energy-efficient, next-generation chips that add compute per unit of power.

McKinsey pointed out that the massive backlog in load interconnection pipeline requests isn't necessarily a sign of a demand bubble. Many applications are speculative and duplicative, with developers and hyperscalers submitting multiple requests to see which secures power first.

Meanwhile, early-stage developers are trying to secure interconnection rights before selling projects to well-capitalized parties that will do the building and install the IT hardware.

"Beyond 2030, our analyses point to a wide range of outcomes, but several structural dynamics are likely to hold," concluded the firm.

"In addition to the growing role of gas, we expect solar paired with battery storage to sustain strong momentum, given its cost competitiveness, modularity, and speed to deploy, though this is contingent to some degree on stable policy support, interconnection reform, and continued declining costs of storage."

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