Investment Concerns in U.S. Data Centers Amid Competition with China

As data center closures continue across the nation, investor and “Shark Tank” star Kevin O’Leary has voiced concerns about America’s ability to compete with China in the artificial intelligence sector. He, along with other investors, argues that establishing data centers is crucial for improving infrastructure and response times necessary for AI development.

Data centers are integral to the growth of AI, providing essential power and storage capabilities. However, local residents are raising issues about utility costs and environmental repercussions, complicating the approval process for these facilities.

“If everyone was talking about data centers, too much heat, too much noise, too much water, that was all 20 years ago,” O’Leary remarked. He emphasized that the technology available today—like advanced cooling systems and improved chip technology—has significantly evolved.

China, according to O’Leary, is actively focused on enhancing its power grid to meet the high demands of data centers while leveraging various energy sources. “Most of it comes from burning nuts. The gas is very clean now, and we have turbines. I’m optimistic—it’s all going to come together,” he added, noting that China has an advantage with faster power developments, which they use to train their AI systems.

Former President Donald Trump has been advocating for increased domestic data center production. His executive order last July aimed to accelerate federal permits to ease the development process. Meanwhile, there’s growing concern within Congress about potential foreign influence on U.S. sentiment and policies surrounding data center and AI advancements. Senator Tom Cotton has called for investigations into whether foreign entities are attempting to sway American views in this context.

“Recent reports indicate that Communist China is trying to influence our policy and public opinion regarding data centers, and the reason is clear,” Cotton stated, emphasizing the competitive stakes surrounding AI development.

On the other hand, some Congressional Democrats, including Senators Bernie Sanders and Alexandria Ocasio-Cortez, are hesitant about advancing data center projects. They recently introduced legislation aimed at pausing new developments until a more comprehensive framework addressing the potential risks of AI can be established. Ocasio-Cortez argued that there exists a moral imperative to safeguard society from the possible harm posed by unchecked AI expansion.

Supporters of data center production argue that these facilities can provide significant local economic benefits. Judge Glock from the Manhattan Institute highlighted that a large portion of economic growth during Trump’s presidency was driven by investments in computing and AI, largely linked to data centers. He warned that failure to maintain growth in this sector could lead to increased unemployment and declining wages.

Industry leaders point out that China’s capability to construct data centers is much faster. NVIDIA’s CEO noted that while it can take approximately three years to develop a data center in the U.S., it’s possible to build a hospital in just one weekend. This disparity raises concerns about America’s long-term competitive edge.

O’Leary stressed that the competition with China is sobering, and if the U.S. does not keep pace, the consequences could undermine its economy and national security. Interestingly, despite having more than 4,000 operational data centers, the U.S. may not maintain its lead if development slows. In contrast, China reportedly has over 300 facilities, fewer than in the U.K. and Germany, yet O’Leary remains cautious about the future trajectory of American data center development.