Nvidia's Ousted CEO Said a 1-Gigawatt Data Center Delay Costs $10 Billion a Quarter. Here's Why That Matters for Power Stocks.

Detailed summary

Former Nvidia (NASDAQ: NVDA) CEO Jensen Huang repeatedly warned the market about key bottlenecks to AI growth. And it's no wonder. As the world's largest supplier to the AI…

Former Nvidia (NASDAQ: NVDA) CEO Jensen Huang repeatedly warned the market about key bottlenecks to AI growth. And it's no wonder. As the world's largest supplier to the AI industry, Nvidia is not only reliant on long-term demand growth for AI technologies but also wants that growth runway to unfold as quickly and smoothly as possible.

Last month, Huang quantified some of the lost economic potential when projects are delayed even just a few months.

Missed AI's "Act 1"? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »

To be clear, Huang has come under scrutiny since he made these comments, for reasons completely unrelated to data center costs and Nvidia's potential. Nvidia's board is investigating reports that Huang was targeted by a Chinese spy operation. Nvidia also issued a press release in which Huang admitted to an affair with a former executive at Singapore-based chip company Megaspeed.

On Nov. 12, Huang resigned and is no longer CEO of Nvidia. But it doesn't diminish his expertise in discussing data center costs.

A month ago, Huang outlined the total cost to construct a new 1 GW data center: roughly $50 billion. Such a facility, he claims, could generate around $40 billion in annual revenue. A three-month delay in construction, then, could result in $10 billion in lost revenue potential. Huang stressed how acutely aware the industry is of this lost economic potential, highlighting that "10 billion worth of revenues will make anybody anxious."

There are many reasons why a data center could face delays. Nvidia is looking to clear up some construction hurdles by shifting more of the assembly process to the supply chain rather than on-site workers. This means more data center components will be able to enter operation faster, with fewer potential bottlenecks.

Arguably, the biggest…

AI…

Opening of the article, excerpted from Yahoo Finance. To read the rest, open the article on the publisher's site.