Music stops or the world changes

Stray reflections on the outer limits of AI Capex

• normalizing construction . . . but normalizing to what?

• an inflection point is coming

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Two reflections on the Nvidia party

Just revisiting some unexpected data about data centers, and surfacing some claims about rubber-hitting-the-road one way or another, soon enough.

Commercial construction continues to sag

Briefly revisiting a curious storm cloud regarding Nvidia’s astronomical growth, the signal remains negative (and puzzling).

The Dodge Momentum Index (a leading indicator of commercial construction projects) continues to sag

Dodge Momentum Index

The DMI dropped by another ~2.3%.

What drove the drop? Well, everything, but also data centers:

“Slower data center” planning “drove much of this month’s decline.”

In the big scheme of things, a 2.3% drop is pretty trivial, even for something as big a deal as data centers. And pretty much everyone knows by now that data centers are a very big deal (and in fact, without data centers, the index would be down 6% yoy). It’s strange to see the index decline, but take that for what it’s worth.

What’s more interesting/concerning is that the index appears to be normalizing to a prepandemic trend.

Now, I confess that I still don’t fully understand what “normalizing” really means, other than looking at what appears to be a fairly linear progression beginning in 2011. The index is keyed to 2000, so I suppose it means that momentum has been steadily growing since then, with the exception of the recent data center boom (which is anything but steady).

All of which is to say, I don’t fully understand how the index could be normalizing, given what we know about infrastructure-related CapEx.

It’s strange, but perhaps I’m missing something obvious. Idk.

‘The music will stop or the world will change’

As a related aside, this is a great slide on the outer limits of potential investment in GPUs.