By Katherine Blunt
Tech companies are earmarking unprecedented sums of money to finance the build-out of massive data centers , with a planned $80 billion equity raise by Google parent Alphabet being the latest example.
But even as the piles of capital secured have grown ever larger, the ability to deploy it in the artificial intelligence race has become less certain. Supply-chain backlogs, permitting fights and availability of power supplies are among the issues that have caused the construction of data centers to fall behind targeted timelines, with the gap growing wider in recent months: A JP Morgan analysis last month found that more than 60% of data center capacity planned for completion in 2027 isn't yet under construction, and another 7% is delayed.
It's a seeming paradox: If hyperscalers can't break ground on many of the projects they have already announced, what difference can hundreds of billions of dollars more make -- however eager Wall Street may be to supply it?
A closer look at Google's AI infrastructure build-out suggests, at least, the beginnings of an answer. In pursuing new facilities for its cloud operation, which brought in $20 billion in first-quarter revenue, the company has taken a novel approach to getting around some of the major bottlenecks facing data-center builders -- in particular, the ability to secure the massive amounts of electric power they require.
Analysts and power-industry experts say the company's strategy of securing its own sources of generation and investing in the ability to shift computing loads to follow power supply could allow it to get its data centers connected to the grid faster than competitors and provide new avenues for deploying its swelling war chest.
Google and other tech giants in recent months have announced significant upward revisions to their capital-expenditure forecasts as the AI race necessitates the frantic construction of hangar-sized buildings packed with servers, networking hardware and cooling systems. Microsoft, Alphabet, Meta Platforms and Amazon last year collectively devoted $410 billion to capex and are expected to spend more than $670 billion this year.
Google pointed to its AI needs on Monday in announcing an agreement for Berkshire Hathaway to purchase $10 billion in shares and plans to sell another $70 billion by various means this year.
Shares in Alphabet fell 3.9% on the news. The company has shed $340 billion of market value over the past three trading sessions, its largest three-day loss on record.
Michael Nathanson, an analyst with MoffettNathanson, said the announcement was a surprise from a company that has historically issued debt to raise capital. He said the market reacted in part to uncertainty about the extent to which tech companies are going to push to accelerate capital spending.
"The fact that they had to raise equity really makes you wonder about the intensity of the capex needs over the next couple of years," he said.
A key challenge companies face is getting approval from grid operators and power companies to connect data centers to the system. The massive facilities, some of which use the same amount of power as a midsize city, threaten to strain the grid during periods of high electricity demand during very hot or cold weather. Some of the delays relate to the complexity of evaluating whether any given project could cause problems for the system.
"Because of how much uncertainty there is about how many data centers are real, about how much load is going to be connected, it has kind of paralyzed a lot of the processes," said Josh Rhodes, an energy expert at the University of Texas at Austin.
This year, Google became the only tech giant to own a power company with the $4.75 billion acquisition of Intersect, a wind and solar developer that in recent years pivoted to building such projects to support data centers. Intersect has energy projects under development to supply multiple gigawatts of electricity, Google said. One gigawatt can power hundreds of thousands of homes.
The company has also amassed a bench of energy sector experts on its staff. "Google really has hired in-house to develop their data centers, and as a result, they have a more integrated approach that I would suggest is a lot more thoughtful," said Jigar Shah, an energy entrepreneur who formerly directed the Energy Department's Loan Programs Office.
Having on-site power is becoming a strategic advantage for tech companies. Regulators and power officials in many regions are considering whether data centers built alongside new power sources should be afforded a faster connection to the grid because they will be less reliant on it.
Companies including xAI, OpenAI and Meta have built or proposed building data centers powered by on-site gas generation. xAI's Colossus data centers near Memphis draw power in part from gas turbines that have raised concerns about air pollution among residents and policymakers.
Other tech giants have bet on nuclear power in the form of traditional large-scale reactors and smaller, modular ones being developed by a range of companies and startups.
Microsoft in 2024 struck a deal with power producer Constellation Energy to restart the undamaged reactor at the Three Mile Island nuclear plant, the site of the worst nuclear accident in U.S. history. Federal regulators this week greenlighted part of the plan to do so.
Building power generation comes with its own bottlenecks. In its analysis, JP Morgan noted that delays in obtaining gas turbines and electrical transformers have contributed to the creep-up in data-center delays.
In addition to faster connection for data centers that build their own power sources, regulators have also considered affording that opportunity to ones that can reduce their electricity consumption or disconnect from the grid altogether when supplies are scarce. Data center operators have for years resisted the idea, arguing that many data center functions are core to critical industries such as health and finance.
Google years ago became the first tech giant to begin studying how its data centers might use less power during times of strain on the grid. The company now has pilot programs with several utilities in which it reduces data-center power use in exchange for payment, a tactic known as demand response.
On Tuesday, Google announced a three-year agreement with demand response company Voltus to help create more capacity in PJM, the nation's largest power market. There, the data center build-out has contributed to higher costs for customers and increased the risk of power supply shortages on hot or cold days.
Under the agreement, Voltus will pay homes and businesses to reduce power consumption during times of peak demand and make use of technology including home batteries and smart thermostats to manage that. The companies say the deal could create as much as 100 megawatts of capacity, which is roughly equivalent to that of a small power plant.
Despite the decline in Alphabet shares, investors seemed to be taking the company's equity raise in stride. Tech stocks were still broadly higher in an extension of what has been a torrid rally that has lifted major indexes to new all-time highs.
Write to Katherine Blunt at katherine.blunt@wsj.com
(END) Dow Jones Newswires
June 02, 2026 21:00 ET (01:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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