TL;DR
Venture capitalist Alex Davis told his investors he is worried that too many data centers are being built without guaranteed tenants, predicting a financing crunch for speculative owners in 2027–2028. Davis’s firm, Disruptive, which recently backed Groq, says hyperscalers will likely own their own facilities and that unchecked buildouts could strain systems and fuel political pushback over electricity costs.
What happened
Alex Davis, a partner at the venture firm Disruptive, circulated a letter to his investors expressing strong concern about the recent surge in data-center construction carried out on a speculative basis. Davis argues that the prevailing "build it and they will come" approach risks creating an oversupply of space without signed tenants, leaving commercial landlords exposed when financing conditions change. He warned of a potential financing crisis for speculative data-center owners in 2027–2028 and said the sector’s expansion could place excessive strain on the broader system. Disruptive recently led a significant investment in AI chipmaker Groq, which has a reported $20 billion licensing arrangement with Nvidia. Davis also suggested hyperscale cloud providers will tend to own their own data centers rather than lease from speculative landlords. The letter frames data centers as growing political flashpoints because of their effect on local electricity prices, and it has prompted questions within the investment community.
Why it matters
- A wave of unleased data centers could leave commercial landlords exposed to a financing squeeze as market conditions shift.
- If hyperscalers prefer to own rather than lease facilities, demand for third-party data-center space could weaken.
- Rapid buildouts are drawing political attention due to their impact on local electricity costs and grid stress.
- Investor scrutiny could slow speculative projects and change how new data-center capacity is financed and contracted.
Key facts
- Alex Davis is a venture capitalist at Disruptive who sent a letter to his investors raising concerns about speculative data-center builds.
- Disruptive recently led a large investment in AI chipmaker Groq.
- Groq has a reported $20 billion licensing deal with Nvidia.
- Davis described the "build it and they will come" strategy as a trap for speculative landlords.
- He forecasted a possible financing crisis for speculative data-center owners in 2027–2028.
- Davis said hyperscalers will likely opt to own their own data centers rather than lease from speculative landlords.
- The expansion of data centers is increasingly a political issue, primarily because of effects on electricity prices.
- The letter has prompted questions within the investment community.
What to watch next
- The health of data-center financing markets heading into 2027–2028, which Davis singled out as a potential stress point.
- How hyperscale cloud providers deploy capital — whether they continue leasing or shift toward owning more capacity (not confirmed in the source).
- Local and national policy responses to data-center growth and electricity price impacts, including possible regulatory interventions (not confirmed in the source).
- Announcements from landlords about tenant commitments and long-term contracts that could alter speculative risk (not confirmed in the source).
Quick glossary
- Hyperscaler: A very large cloud provider that operates at scale to deliver computing, storage and networking services across many data centers.
- Speculative data center: A facility built without pre-signed tenants or long-term contracts, relying on future demand to fill capacity.
- Financing crisis: A situation where lenders tighten credit or withdraw funding, making it hard for borrowers to refinance or raise capital.
- Licensing deal: A commercial agreement where one company permits another to use its technology or intellectual property under set terms.
Reader FAQ
Who is Alex Davis?
He is a venture capitalist at the firm Disruptive who circulated a letter warning investors about speculative data-center builds.
What specifically did Davis warn about?
He cautioned that many data centers are being built without guaranteed tenants and predicted a potential financing crisis for speculative landlords in 2027–2028.
Is Groq involved in these concerns?
Disruptive recently led an investment in Groq; Groq also has a reported $20 billion licensing deal with Nvidia. Beyond that connection, further involvement is not confirmed in the source.
Will governments step in over electricity and data-center issues?
Not confirmed in the source.
Dec 29, 2025 – Business Exclusive: Groq investor sounds alarm on data centers Dan Primack facebook (opens in new window) twitter (opens in new window) linkedin (opens in new window)…
Sources
- Groq investor sounds alarm on data centers
- How AI data center–driven power demand eases bubble fears
- Exclusive: Groq investor sounds alarm on data centers
- What the Nvidia-Groq Headlines Missed + The 3 …
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