“Hyperscale data centers - many of them - will end up like the abandoned JC Penney strip mall - because there is not the demand to support them and distributed computing will capture much of the new compute business.”
The Black Swan Files
We have been saying it for 3 years - the entire data center madness phenomenon is a bubble, driven by forces NOT INHERENT TO A.I. - driving needless data centers that will become stranded assets in the near future.
We will cover it - with A.I. experts in our upcoming webinar on August 26th, 2:00 PM Central - register here:
https://us06web.zoom.us/webinar/register/WN_jmuwSJhCQdy5v9FrjK7hlA
Through it all - after live demonstrations showing entire data center-consuming applications - running on an Apple mini - using less power than a kitchen microwave oven - the eternal Fool’s Fallacy remained:
The Fool’s Fallacy:
Yeah, but you are the only guys who are saying it, so it must not be true.
LinkedIn posts, webinars, presentations to state legislatures, meetings with candidates for governor - and through it all remained the Fool’s Fallacy:
“BUT YOU ARE THE ONLY GUYS SAYING IT.”
Well that all changed this month.
Apollo Management - a widely regarded financial organization - stepped out with a detailed analysis - COVERED IN FORTUNE MAGAZINE - of what we have been saying on The Black Swan Files and DataCenterMadness.com.
The data center boom is financially unsustainable.
The numbers are upside down.
The investment is in data centers for demand which does not exist.
Data centers are going to be stranded assets - like abandoned strip malls with JC Penney and SEARS stores - boarded up with trash around their entrances.
That is coming to your neighborhood because these data centers cannot sustain themselves over the next couple of years without exploding revenue - and that call ain’t even close - the revenue is not there.
Nor will that revenue arrive in the dead of night - because going forward the future of A.I. is injecting intelligence into corporate databases - making constrained, defined applications - like billing, revenue recapture, customer service - intelligent - or close to it.
Those outcomes do NOT need centralized data centers.
Now Apollo Management and Fortune Magazine join the party:
https://fortune.com/2026/08/10/torsten-slok-ai-profit-margins-capex-oracle/
The heart of the analysis is why bubbles happen - the “growth” in A.I. or what some would call demand - is funded by building infrastructure - not profits from A.I. itself.
Think that through - the data center guys destroying your land, driving massive power lines across your state - consuming the best parts of ranches belonging to families since they arrived on wagon trains - those guys are builders - not A.I. guys.
The difference is builders build infrastructure and leave.
Infrastructure is pretty much forever - once you ruin rural farmland, it’s gone - the families depart, economic value is destroyed.
Those builders aren’t from the neighborhood - they split to the next state - like a swarm of locusts destroying everything in their path.
You were told A.I. was a national imperative - America must win at A.I. or adversaries would prevail.
So who told you that?
The builders, the electric line guys, the politicos who granted waivers - they told you that nonsense - and there wasn’t much you could do to stop the madness.
Now you see it is all BS - because the finance guys started publishing numbers which cannot be ignored.
The Apollo Management reporting does not stand alone.
If you take the time to look around - now that the bubble is certain to burst - you will find all kinds of deep analysis showing the only possible outcome for a lot of these data centers is - STRANDED ASSETS.
Here’s a video from analyst Ed Zitron on why the numbers are totally upside down - and the minute infrastructure building slows - the ceiling collapses:
For years our team has been warning state governments - often with face-to-face meetings with its politicos, that A.I. isn’t something new - it’s been around for decades - and it does not need a centralized data center.
It never needed a centralized data center.
China does not build hyperscaler data centers - they use small computing footprints.
Europe does not build these super sized data centers - they are all about distributed computing - eliminating the need for additional power lines.
What’s new is retail A.I. - easy to use A.I. toys like ChatGPT which enable any person with a phone to ask any question and get more information than they could yesterday with a Google query.
Now you learn those 100 million ChatGPT users may love asking questions like “why is Japanese fusion food better than Mexican” - but they DO NOT WANT TO PAY FOR THE ANSWER.
Overnight, everyone, and we mean about everyone said A.I. is going to explode and change the world - it will take over humanity, unemployment everywhere - terrible things would happen as wonderful A.I. horizons became achievable.
And it was all BS and BS repeated endlessly by the Fox Business News types like Charles Payne and the tech writers at the Wall Street Journal and the MIT Tech Review.
Through it all, there we stood, with an Apple mini - costing $4,000 - running a provable data center-consuming application on it - and that was not proof enough for many.
Well, proof enough it was for the few - those who knew BS when they saw it and started building fascinating A.I. applications - just coming out this quarter - saving commercial entities millions of dollars a year - and could not have been built with conventional technology.
And - they run on an Apple mini or a tiny Intel computer or a PC.
So, let’s take this moment to refocus on what the future looks like for A.I.
The future of A.I. is intelligence everywhere - on your phone, watch, tablet, computer, in your car and refrigerator.
You may not want all the A.I. features companies build into products but they are going to do it nonetheless - because A.I. generates new outcomes.
What A.I. does not generate is the revenue for massive, centralized, hyperscaler data centers - as the analysis from Apollo shows - and Apollo is not alone.
The future is distributed, widely distributed A.I. everywhere - enabling decisioning at the point of the problem.
Without centralized data centers.
Data centers are not needed for A.I. compute - it can be distributed throughout the empty areas in schools and rural hospitals.
We know that because we can prove it right now - if anyone cares to try out that model.
Every company or government agency has over 1,000 times the compute power it thinks it has - today - if it focuses on distributed computing - not centralized.
Decisioning where the problem lies means no centralized data center because there is no need to send data to that behemoth to decide if the car, hurtling at 60 miles per hour down an Austin highway can make the turn or not.
Here is one of our videos on where the overwhelming amount of data and decisioning is coming from - and it is not and cannot be centralized:
The future of A.I. is constrained, money making applications, delivered in weeks, maybe a month or two - not years.
These applications do not need a central data center because they compute where the data resides, where the data is created and they deliver instant decisioning.
The future is about to change - or better said, the perception of the future is about to change in a big way as the now sure collapse of the data center madness is seen to be inevitable.
After Apollo, more people will pay attention to the numbers and put down the Kool Aid - then a few more, then investment dries up - then half built data center projects will be abandoned.
The scars on the land, the destroyed farms and ranches - will retain the scars - because abandoned data center building projects just accumulate debris and weeds.
As new applications hit the market - using A.I. to recover billions of dollars in medical billing - economically impossible with current tech, with centralized compute - the future will reveal itself with revenue producing applications.
Without central data centers.
Now is the time to start asking the question the Hollanders should have asked in the 1600s -
If the numbers prove this thing is unsustainable, maybe we should pay attention.
Welcome to the party.
The Black Swan Files publishes the information you will not read anywhere else - certainly not in the tech press, the Wall Street Journal, The MIT Tech Review - because they are in the pocket of the obsolete tech giants who NEED centralized data centers.
We were among the first - years ago - showing why A.I. economics would not subsidize massive, centralized data centers.
We showed how the U.S. Government failed - and continues to fail - to be able to manage drone swarms - when all comms is lost - and only the Chinese and a couple of small software companies can do it.
Our team currently serves as expert witnesses in 5 states, where we demonstrate huge, data center-consuming applications - running on a computer you can hold in your hand - an Apple mini.
Please subscribe at: TheBlackSwanFiles.Substack.com because we are just getting started delivering industry experts who challenge the false narrative that the future of A.I. is massive data centers.
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