Ep. 039 - [EMERGENCY] Brad Gerstner Cut Our 2027 Forecast in Half. We Raised It. (Datacenters)

Summary

• SemiAnalysis raises its 2027 data center forecast from 43 GW to 50 GW amid public challenges to its scale. Against expectations closer to 25 GW, the team points to construction already underway, tracked “not even campus level, but building by building,” alongside permits, power allocations and supplier activity.
• The forecast already incorporates construction delays and gradual capacity ramps, making another blanket haircut potentially duplicative. Jeremie says the team adds one to three quarters where warranted. At the discussed Crusoe site, the model includes under 200 MW rather than the full gigawatt critics assumed; Jordan notes that an additional haircut could “double count” adjustments already made.
• Jordan points to more than $1 trillion of signed data center leases as support for the construction outlook. Jeremie emphasizes “binding contracts that cannot be cancelled,” with private operators contributing commitments that public-company disclosures miss. Early construction orders, electrical equipment and cooling deliveries provide additional checks on when those commitments become usable capacity.
• Modular construction is the team’s central explanation for delivering more capacity despite labor constraints. Reyk contrasts traditional 18-month builds with DayOne’s roughly nine-month timelines. His physical example is a shipping-container-like power hall slotted into a building, replacing extensive on-site electrical work: “modular is what’s making this work.”
• Power remains the immediate constraint even when GPUs and physical space are available. Jordan highlights operators installing more GPUs and power-capping them to fit the available electrical envelope. Jeremie says buyers can obtain GPUs today but struggle to secure land, power and shells within three to six months, helping explain prevailing skepticism.
• Data center oversupply entering 2028 is a risk Jeremie watches, rather than a formal forecast. If facilities expand faster than chip supply, today’s bottleneck could reverse; he sees that possibility as relevant to semiconductor fab and equipment investment. When Jordan checks how firmly he is making the call, Jeremie clarifies: “I didn’t say formally. I’d say it’s the main risk as we get into 2028.”

Deep dive

1. The 50 GW forecast rests on buildings already taking shape

• Jordan opens with the disagreement: Brad Gerstner treated SemiAnalysis’s previous 43 GW forecast for 2027 as “too aggressive,” while skeptics expect roughly 25 GW. The team has instead raised its forecast to 50 GW. Its evidence includes 40 pictured construction sites representing less than half of the global data centers shown.

• Jeremie traces the model’s record to a March 2024 outlook anticipating acceleration in 2025 and 2026. Jordan corrects one detail: the chart showing limited forecast revisions concerns 2026. Jeremie’s methodological point survives the correction—the team triangulates chip, data center and energy signals rather than relying on a single industry forecast.

• Reyk describes tracking “not even campus level, but building by building,” using permits, power allocations and satellite photos. Mapping more than 400 moratoriums against tracked locations produces an affected share of roughly 10%, he says. Grid constraints also require project-level assessment: some sites can use on-site generation. His claim about the relevant projects under construction is that “all of them pass this bar.”

2. Delays change delivery schedules without erasing entire campuses

• Jordan’s pushback is about timing: even without cancellations, could enough projects slip by two quarters or a year to move capacity into 2028? Reyk says 12-month timelines are already aggressive. Faster promises, new developers, obscured permits or power sources, and no identified tenant all raise questions. These factors help the team avoid treating longer-duration projects as 12-month builds.

• The uncertainty remains real. Reyk cites a transformer blowing up at a Core Scientific site as the kind of disruption that can surprise the team: “they can catch you off guard.” Jeremie says developers targeting delivery around mid-2027 may receive another one to three quarters in the model, depending on observed conditions.

• Jeremie separates a site’s first delivery from its subsequent ramp to full capacity; a site under construction does not mean all its capacity will be counted for 2027. Oracle’s New Mexico project has over a gigawatt of IT capacity under construction, but substantial power challenges mean only a relatively small contribution enters the 2027 forecast. Jeremie says SemiAnalysis flagged those problems before broader coverage and assumes a much slower ramp.

• For the discussed Crusoe project, Jeremie rejects claims that the forecast includes a whole gigawatt: “we have under 200 megawatts” in the latest version. Buildings containing 200–400 MW do not immediately become fully operational: “you don’t go from zero to 400.” Jordan’s objection to another blanket discount is that it risks “double counting almost.”

3. Contracts and supplier orders provide earlier checks on delivery

• Jeremie describes a sequence of observable commitments. Pre-leasing often precedes financing and construction, although contracts can be signed at different project stages. Hyperscalers, neoclouds and AI labs sign what he calls “binding contracts that cannot be cancelled.” Rising quarterly self-build construction starts then provide a more physical indicator of how much larger 2027 could be than 2026.

• Jordan points to more than $1 trillion in signed data center leasing. Jeremie says estimating that total requires building-level pricing, contract duration and escalators. Public crypto-mining companies such as Core Scientific reveal backlogs reaching tens of billions of dollars, while private operators—including QTS, EdgeConneX, Aligned and Vantage—require separate tracking to capture commitments public-market investors may otherwise miss.

• Sterling supplies the concrete leading-indicator example: its groundbreaking and site-work orders arrive early, and Jeremie says the team anticipated their surge. Electrical and cooling equipment follow; accelerated deliveries can strengthen supplier revenue, while shipping problems can delay facilities. Energy equipment provides another timing check: gas turbines have multiyear lead times, while reciprocating engines offer shorter alternatives.

4. Modular construction changes the labor requirement and competitive timetable

• Reyk contrasts traditional 18-month construction with DayOne timelines of around nine months for 100-MW sites, and cites Bridge Data Centres in Southeast Asia building in six months. Anthropic reference designs, Meta’s tents and Amazon’s new buildings illustrate wider adoption. He also recalls Project Houdini’s stated goal as, “I think,” 6 GW annually for the next two or three years.

• The mechanism is physical: imagine a power hall resembling “a literal shipping container,” slotted into the data center shell and connected. That demands much less site labor than “20 electricians” coordinating a conventional installation. Reyk’s argument is that repeated modular deployment changes the labor intensity of the whole buildout, rather than merely accelerating an unchanged construction process.

• Competition reinforces adoption. A developer offering 12–14 months loses value against one offering eight or nine; Reyk also thinks firms avoiding modular designs may struggle to obtain labor. Jeremie says newer facilities optimize construction, ramp and commissioning together. The team is preparing a fuller labor analysis, but Reyk’s current conclusion is that “modular is what’s making this work.”

5. The bottleneck could reverse as data center supply catches up

• Jordan preserves a constraint that faster construction alone does not settle: operators can overdeploy GPUs and then power-cap them within an available electrical envelope. Jeremie agrees that GPUs are currently easier to obtain than data center megawatts. Buyers seeking immediate deployment can access chips but struggle to secure “land, power, shell” within three to six months.

• Looking further out, Jeremie is slightly more worried about data center supply exceeding chip supply than the reverse, especially entering 2028. Jordan checks whether that was a formal oversupply forecast; Jeremie narrows it explicitly: “I didn’t say formally. I’d say it’s the main risk as we get into 2028.” The distinction matters to the strength of the call.

• The resulting question is how quickly semiconductor supply can expand. Jeremie says that expansion would support new fabs and equipment investment. He interprets Jensen’s large memory and logic supply commitments as efforts to remove constraints, while acknowledging cyclicality: Jensen also secured substantial GPU supply for the 2021 crypto-mining boom, which subsequently crashed.

• Jeremie’s explanation for the disagreement is temporal: “it’s easier to feel what’s happening right now” than anticipate conditions 12–15 months ahead. Jordan’s framing is that the obstacles are real but hard to measure accurately; Reyk says many lower forecasts may not be based on accurate information.