(Bloomberg) — Companies are seeing increasingly meaningful artificial intelligence adoption, but constraints on computing supply remain a bottleneck for growth, according to Morgan Stanley’s Michelle Weaver.
“We are very much undersupplied. We are seeing compute being a constrained resource,” said Weaver, a US thematic research strategist at Morgan Stanley. “The power bottlenecks, political bottlenecks, labor bottlenecks – that will keep a check on supply for the next few years.”
WATCH: Morgan Stanley’s Michelle Weaver says AI demand continues to outstrip available computing capacity, and she sees little risk of oversupply anytime soon. Source: Bloomberg
Weaver offered that assessment in a Bloomberg Television interview Wednesday against a backdrop of quickening corporate AI adoption. Among S&P 500 Index companies, 25% can now quantify measurable returns from AI investment, up from 14% a year ago, she said. Funding for data centers is also plentiful, as seen by Nvidia Corp.’s partnership with Wall Street firms to source $500 billion in financing for AI architecture.
There are two key reasons for the compute bottleneck: a lack of workers to build data centers and an electricity shortage to power them, Weaver said. Even when accounting for innovative power solutions including Bitcoin-mining conversions and fuel cells, she estimated a remaining 10% to 20% power deficit, keeping compute a constrained and high-value resource for years ahead.
Rising anti-data center sentiment is also a challenge to the industry as the midterm elections approach, Weaver said. While there are options for building the facilities while addressing consumers’ worry over power bills and environmental concerns about water and air quality, the issue is likely to intensify in the homestretch of the campaign, she said.
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