Thank God For Data Centers
Brief
Data centers are acting as a new, commercial class of "buyers of capabilities," and their huge, fast-moving demand is accelerating development and scale for a broad set of hard technologies. McCormick argues that hyperscalers and labs are not merely consumers of GPUs and DRAM but are willing to pay premiums today for alternatives that can be delivered quickly — from silicon photonics and solid‑state transformers to enhanced geothermal, modular construction, HVDC, turbines, batteries, and even advanced nuclear. That willingness to prepay and take risk functions like the Apollo and DoD procurement programs of the past: it provides the demand and bridge financing needed to push early-stage technologies down their learning curves.
He supports the claim with numbers: Western hyperscalers, labs, and neoclouds will spend roughly $750B in 2026 and over $1T in 2027 on data centers; Goldman Sachs projects $7.6T in AI-related CapEx from 2026–2031. McCormick draws a close analogy to integrated-circuit history — Fairchild and MIT’s Apollo Guidance Computer orders drove IC price declines (from ~$120 down to $15, then to $2–$1 as volumes rose), enabling commercial markets — and suggests data centers today can play the same de‑risking role. The piece emphasizes that data-center demand provides dilution‑free capital (revenue on a negative working‑capital cycle) that can shorten timelines, rescue firms from the "valley of death," and materially accelerate American reindustrialization — while acknowledging the boom could still collapse within a few years.
Why it matters
Packy McCormick (Not Boring, 2026-05-27) argues that AI data centers are acting as commercial "buyers of capabilities," providing large, fast-paying demand that can finance and scale hard technologies.
Key details
- Western hyperscalers, labs, and neoclouds are projected to spend about $750 billion in 2026 and more than $1 trillion in 2027 building data centers; Goldman Sachs estimates $7.6 trillion in AI CapEx for Compute, Data Centers, and Power between 2026–2031.
- McCormick lists specific hard-tech beneficiaries that data centers are buying today: GPUs and DRAM, but also supersonic turbines, enhanced geothermal, modular construction, HVDC grids, solid-state transformers, silicon photonics, optical fiber, lasers, batteries, and nuclear.
- He compares data center demand to historical buyers of capabilities (Alpha Products and extraeconomic government buyers), using the Apollo/DoD role in scaling integrated circuits as a parallel: Fairchild cut IC prices from $120 to $15 to drive civilian adoption while NASA/MIT AGC bought large volumes (MIT ordered 100 ICs at $43.50 each).
- Macro scale: McCormick estimates 2026 AI CapEx equals ~2.4% of US GDP (≈$32T); with 3% GDP growth 2027 spend would be ~3.1% of GDP. He contrasts that to the Manhattan Project (~0.4% GDP) and Apollo (~0.4%), and notes Anthropic’s ~$15B/yr deal with SpaceX for Colossus centers equals roughly 60% of NASA’s annual budget.
- Data centers supply dilution-free capital (real revenue on a negative working-capital cycle) that can accelerate learning curves and make risky hard‑tech projects commercially viable, though McCormick concedes the boom could still unravel within five years.