Nvidia Analyst Warns 45% of AI Data Center Capacity Planned for 2027 May Not Get Built
I'm LongbridgeAI, I can summarize articles.Seaport Research analyst Jay Goldberg warns that power, turbine, and labor shortages may prevent 45% of planned 2027 AI data center capacity from being built. This shortfall threatens Nvidia's future chip demand, leading to a 'Sell' rating with an $180 price target. While Microsoft and Amazon face connection delays, Nvidia also faces risks from financing smaller cloud providers. Conversely, SemiAnalysis remains optimistic about construction progress.
Nearly half of planned AI data center capacity may not get built next year, threatening future demand for Nvidia Corp. (NASDAQ:NVDA) chips, a bearish Wall Street analyst warns.
Seaport Research Partners analyst Jay Goldberg estimates only 30 gigawatts of 55 gigawatts announced for 2027 will materialize, Barron’s reported Friday. That represents a potential 45% shortfall.
Goldberg maintains a Sell rating and $180 price target, about 15% below Thursday’s closing price.
He points to shortages of electricians, gas turbines and electricity connections as major obstacles.
Microsoft Corp. (NASDAQ:MSFT) recently withdrew from an Nvidia-backed Nscale data center project in England after its expected electricity connection slipped into the 2030s. The facility was intended to house more than 23,000 Nvidia GPUs.
Amazon.com Inc. (NASDAQ:AMZN) has faced similar problems, with some Nvidia servers sitting in warehouses while the company waits for data centers to have enough electricity to operate them.
Nvidia’s Financial Exposure
Goldberg’s concerns extend beyond construction delays. Nvidia is also helping finance some of the companies expected to buy its chips.
He argues that investments, loans and credit guarantees amount to “another form of discounting,” allowing Nvidia to support sales without formally cutting chip prices.
Goldberg believes Nvidia would rather have 200 smaller, dependent customers than rely on three powerful technology giants.
But smaller cloud providers such as CoreWeave Inc. (NASDAQ:CRWV) and Nebius Group (NASDAQ:NBIS) need enormous amounts of financing to keep buying Nvidia’s chips. If they struggle, Nvidia could face weaker sales and pressure on its margins.
Nvidia had $279 billion in supply and capacity commitments as of July 26, more than double the $119 billion reported a quarter earlier.
It also disclosed $36 billion in cloud-service commitments to providers buying its hardware.
Nvidia warned in its latest quarterly filing that infrastructure shortages could delay chip purchases and hurt revenue. Some supply commitments can be adjusted or canceled.
Analysts Disagree on Construction Outlook
Research firm SemiAnalysis takes a more optimistic view, identifying more than 24 gigawatts already in advanced construction across 40 campuses.
“Gigantic sites are simply getting built, and many are on time,” its researchers wrote Monday.
A delayed data center also does not necessarily mean a lost Nvidia sale. Chips could instead go to customers with available electricity.
Goldberg himself expects record Nvidia sales into early 2027, but believes the risks will grow over the following year.
On Polymarket, Nvidia’s odds of finishing 2026 as the world’s most valuable company fell from above 80% earlier this month to 56% in a Friday morning snapshot, while Apple Inc. (NASDAQ:AAPL) climbed to 41%.
Nvidia shares closed Thursday at $212.21, down 4.4%.
Image: Shutterstock
Read Also: 'Intel Plus Elon' Could Pose Bigger Threat to TSMC Than Musk Alone, Chip Analyst Says
Login to unlock2,065characters for free
Due to copyright restrictions, please log in to your Longbridge account to view this content.
Thank you for your understanding and support of licensed content.