Alex Medick

The world may be running out of data center capacity, as if we didn’t have enough to worry about.

The emergence of cloud computing as a major component of digital transformation has motivated Amazon, Microsoft, Google, and others to build data centers at a frenetic pace in recent years. So far, they have been able to expand their capacity to keep up with demand.

But there’s a new elephant in the room, and he’s hungry: Artificial Intelligence (AI). The development, training, and operation of AI

Navigating the Data Center Drought:  Can Infrastructure Scarcity be Alleviated?

The world may be running out of data center capacity, as if we didn’t have enough to worry about.

The emergence of cloud computing as a major component of digital transformation has motivated Amazon, Microsoft, Google, and others to build data centers at a frenetic pace in recent years. So far, they have been able to expand their capacity to keep up with demand.

But there’s a new elephant in the room, and he’s hungry: Artificial Intelligence (AI). The development, training, and operation of AI models requires immense computing and storage resources, much greater than traditional applications, and often much more than individual organizations can provide in their own data centers. The accelerating pace of AI development and its reliance on the cloud may soon result in a “data center drought,” or critical shortage of data center infrastructure capacity worldwide.


Understanding the Data Center Drought

The challenges that face data centers are driven in part by three major trends:

 * Surging demand for cloud services: This trend started before COVID, but COVID accelerated the demand for remote-work capabilities (e.g. Zoom and Microsoft Teams) and streaming services. Ongoing digital transformation initiatives now move an increasing number of applications into the cloud. All of these compete with AI for data center infrastructure.
 * Challenges in building new facilities: Data centers take up scarce resources: land, electricity, water, and more.  A data center’s cooling needs can consume millions of gallons of water per day. Some communities now push back against proposed data center projects. Higher construction costs and more environmental regulations add to  the challenge.
 * Power constraints: A modern data center can eat up over 100 megawatts of power to operate—enough to power a small city. Power for the servers themselves is only part of the problem. Cooling them requires immense capacity that uses more electricity and water. Data center operators are motivated to use more “green” power sources, but few locales have the right combination of abundant sunshine or wind, sufficient water, and access to the power and network grids.


Implications of the Impending Infrastructure Scarcity

The impacts of a data center capacity crunch could be significant.

In the case of AI development—already hobbled by a lack of available graphics processing units (GPUs) needed to train AI models—the continued growth in AI technology innovation could slow to a crawl.

But in the big picture, a data center drought could have important economic and environmental concerns. High demand and reduced supply will drive up prices for cloud services. This might motivate companies to move their applications and storage back into their own data centers, most of which rely on non-renewable power sources and are less power-efficient than modern data centers.


What Solutions Are Available?

The good news is that these potential outcomes have not gone unnoticed by data center developers, who must prevent a full-on infrastructure crisis:

 * Design and construction innovations: New ideas, such as modular data centers and advanced construction techniques, could reduce the time and cost for data center construction.
 * Energy efficiency and sustainability: Continued advances in renewable energy sources, backup batteries, and developments such as liquid cooling (as opposed to massive air conditioners) promise to reduce the power requirements of large data centers.
 * Policy and regulatory changes: Data center operators work with local, state, and national government agencies to make changes in zoning, taxation, and energy policy that could ease the regulatory burden of data construction while they alleviate environmental concerns.
 * International collaboration and investment: The major cloud service providers already operate global networks of data centers, and this should continue as developing nations see data center construction as a source of jobs and economic expansion. As long as the environmental impact to these countries isn’t ignored, this trend could be a win-win for everyone.
 * Technological advances: Improvements in data center and equipment design, such as reducing the number of conversions between AC and DC power, can further improve efficiency. Many management tasks that require human operators (which are also in short supply) could be taken over by AI-powered systems.


TensorWave’s Role In Solving the Data Center Drought

TensorWave is doing its part to address the impending data center drought, specifically in the area of AI development.

We recognize that AI development is among the most energy-intensive of human endeavors, in particular the development and testing of large language models (LLMs) such as ChatGPT. We believe the answer is not just more or bigger data centers but more efficient data center design, implementation, and operation.

The centerpiece of our approach is the deployment of more-efficient AMD Instinct GPUs and more-intelligent allocation of these hardware resources to meet our clients’ AI development needs. We enable sustainable development practices and have set a new standard for “greener” data center operations.


Outlook: Can We Prevent the Data Center Drought?

Can we, as an industry, prevent a new “AI winter” that mitigates or prevents a data center drought? At TensorWave, we believe the answer is “yes,” but there are many “ifs.”

It starts with a critical look at where we put data centers and how to squeeze more power and cooling efficiency from them. This, in turn, will be driven by hardware design and management. Our approach to scalable GPU allocation can serve as a model for other applications, in AI and beyond.

The future holds additional challenges and opportunities. The appetite for AI development will not diminish, given opportunities in intelligent robotics and other areas. The benefits of sufficient data center infrastructure capacity are simply too great. As long as there is a profit to be made from increased capacity and the efficiency of its delivery, there will be investments in the innovations to make it happen.


Conclusion

Data centers play a critical role in today’s economy to support technology industries in general and AI development in particular. Sustained growth in these industries depends on the continued availability of sufficient data center capacity.

The possibility of a data center capacity drought cannot be ignored and must be met head on with innovative approaches to the location, design, power, cooling, and operation of data centers. Initiatives such as TensorWave’s approach to deployment and management of more-efficient hardware can play a central role.

But no single company can do it alone. To meet the challenges of data center capacity requires collaboration among technology companies, policy makers, and energy producers to find sustainable solutions. TensorWave welcomes all opportunities to work with other entities in the drive toward sustainable solutions.

TensorWave Welcomes the AMD Instinct™ MI355X

Navigating the Data Center Drought: Can Infrastructure Scarcity be Alleviated?

Subscribe to our Blog

Stay ahead of the curve with the latest in AI, AMD accelerators, and all things TensorWave.

Product

Resources

Company

© 2025 TensorWave Inc. - All rights reserved.