Newsletter · · Ashutosh Agarwal

Power Is the Binding Constraint on AI With 32 Gigawatts Under Construction and GE Vernova Turbines Sold Out Through 2029 - Powering AI: Grid, Gas, Generation & Nuclear - Week of June 25, 2026

Powering-AI newsletter for the week of June 25, 2026. The binding constraint on AI buildouts is power, not chips: 32 GW of data centers are under construction worldwide, GE Vernova turbines are sold out through 2029 with prices up 300% in three years, and the bear case has sharpened from 'bubble' to single-digit ROICs.

Powering AI: Grid, Gas, Generation & Nuclear

Week of June 25, 2026: Power Is the Binding Constraint on AI With 32 Gigawatts Under Construction and GE Vernova Turbines Sold Out Through 2029

Every quarter the data-center story gets retold as a chip story, and every quarter the people actually pouring concrete tell you it's a power story. This week the operators were loud about it: the binding constraint isn't GPUs or demand, it's electrons and the iron that makes them. Meanwhile the bears finally showed up with a real argument, not "it's a bubble" but "the returns don't pencil." Let's get into it.

TL;DR

  • Power is the whole game. 32 GW of data centers are under construction worldwide (6x 2020 levels), pre-leasing is "almost complete," and the queue to plug into the US grid now runs seven to eight years. Landlords with power in hand are sitting on the scarcest asset in the complex.
  • The turbine cartel is printing. GE Vernova gas-turbine prices are up 300% in three years and the company is sold out through 2029, the cleanest read on how desperate hyperscalers are for behind-the-meter power.
  • The bear case got sharper. Chanos and GMO aren't yelling "bubble," they're showing single-digit ROICs and a depreciation lag that's flattering hyperscaler earnings today and will bite later.

What's new

The construction pipeline went vertical, and it's nearly all pre-leased. On The HC Commodities Podcast, Cushman & Wakefield's Eugene McGrane (an operator who reps hyperscalers on site selection) laid out the scale shift: "In 2025, we had 12.5 gigawatts under construction in the world… now we have 32 gigawatts. Eighty percent of that's in the United States." Deals went from 50 MW parcels to "a gigawatt" baselines, and pre-leasing is "very healthy to almost complete… with very little slack in the line." For the landlords (EQIX, DLR) that's the supply-demand picture you want: vacancy "pretty darn close" to nil and tenants pre-committing before the slab is poured.

The grid is the bottleneck, and the wait is measured in years. EQT Partners' Ken Wong, who deploys private infra capital into data centers, told The Rules of Investing the constraint is "grid connectivity, grid connectivity and grid connectivity," with US interconnection wait times of "seven, eight years." How much capacity is being left on the table? "Probably double, triple, if not more." McGrane's anecdote made it visceral: ERCOT "just went to $5,000 a megawatt as a hold number to keep your place in the queue," and developers are issuing $25M capital calls just to defend their spot. Power isn't a line item; it's the moat.

"Power is the moat. But how you get access to the power, how much of the power is available." (Eugene McGrane, Cushman & Wakefield)

Microsoft just bought its way around the grid, and there's more coming. On Squawk on the Street, David Faber broke the 20-year Microsoft-Chevron-GE Vernova deal: a ~2.67 GW gas-fired, co-located campus in West Texas ("Kilby"), turbines arriving "later this year into 27 and 28." More important than the deal is the tell at the end, Faber says "at least perhaps two more" hyperscaler-plus-E&P announcements are coming "between now and Labor Day." Self-supplied behind-the-meter generation is becoming the default playbook when the grid won't move fast enough.

The turbine market is the cleanest demand signal in the complex. Reporting from GE Vernova's Greenville floor on Squawk on the Street, Seema Mody said turbine pricing "soared up 300% in the last 3 years," GEV is "effectively sold out… till 2029" with orders booking into 2031, and, the detail that matters, "executives from every hyperscaler, including OpenAI['s]… head of power, have walked the floor." Alger's Ankur Crawford put hard numbers on it on Animal Spirits: CCGT pricing has gone "from like 1250 per megawatt to something like 2500… inside of the last year. That's insane."

The bear case finally has receipts. On Monetary Matters, Jim Chanos argued the granular neocloud deals are "penceling out at 7%, 6%, 5%, 8%, all single digit ROICs pre-tax," and that hyperscaler capex sitting in construction-in-progress means "12 to 18 months where you've spent money on the data center, but it isn't producing revenue yet," flattering earnings now. GMO's Ben Inker, on Excess Returns, reached for the railroads: transformational tech, terrible returns, because "you get way too much investment and you destroy that ROI," and noted hyperscalers have "doubled their debt ratios in the last nine months."

The debate

Bull: scarcity is the whole thesis, and it has duration. The most interesting bull argument this week wasn't "demand is huge," it was "supply physically can't keep up, so this can't overheat." Crawford on Animal Spirits: "We are in fact rate limited by the supply chain… we can't get into bubble territory right now… that gives you duration." Old-generation Hopper chips renting up 30-40%, turbines doubling, grid queues stretching past 2032, every gauge says supply, not demand, is the cap. For landlords and power owners, scarcity rent is the trade, and it runs "through the end of the decade."

Bear: the spending doesn't earn its cost of capital. The other side isn't denying the demand, it's questioning who gets paid. Single-digit ROICs (Chanos), debt ratios doubling in nine months and an IPO supply wave coming (Inker), and the depreciation-lag point both raised: if these buildings really last 15 years instead of 30 (a concern echoed by the WSJ panel this week), today's reported earnings are borrowing from tomorrow's. The neocloud layer, in Chanos's frame, is "an equipment leasing company… a finance company, in effect," not a high-margin tech business.

The honest read: the operators are unanimous that power scarcity is real and durable; the skeptics are unanimous that scarcity rent doesn't guarantee shareholder returns. Both can be true. The landlords with contracted power and AAA tenants on 20-year take-or-pay (Wong's EdgeConneX grew EBITDA from ~$100M to ~$3B in five years) are the cleanest expression of the bull case; the leveraged neoclouds are where the bear case lives.

Names in play

American Tower (AMT) got a full workup on The Investor's Podcast: a $54B non-cancellable lease backlog, ~9.3% ROIC that's held between 8-11% since 2007, 5x net leverage at a 3.5% blended rate, and that beautiful tower operating leverage (a third tenant takes gross margin to ~83%). The hair: DISH "defaulted on its lease obligation… now in federal court," ~$200M/year and ~4% of North American revenue at stake. A reminder that the tower thesis is steady-eddy carry, not a power-scarcity rocket.

GE Vernova (GEV) and Vertiv (VRT) are the picks-and-shovels names the tape keeps circling, GEV via its sold-out turbine book, VRT flagged on Stock Market Today With IBD as the "institutional quality leader in data center cooling," with full-year EPS guided up 54%.

Read-throughs

  • Utilities/IPPs & power: FERC chair Laura Swett on POLITICO Energy confirmed the agency punted cost-allocation to the states via show-cause orders, more granularity, tighter timelines, but no national rulebook. Translation: a patchwork, and speed-to-power stays the data center's "chief mandate."
  • Transmission: On Catalyst with Shayle Kann, the ~$960M, 107-mile Mid-Atlantic Reliability Line targets construction in 2029 and likely doesn't energize until 2032-2033, a stark mismatch with hyperscaler timelines, and the reason behind-the-meter gas is winning.
  • Nuclear/SMR: Nano Nuclear's CEO told Payne Points of Wealth he's in active talks on a "gigawatt project… 60 reactor systems… for this one particular site," with at-scale costs dropping toward "9 cents per kilowatt hour." Real, but a 2030 story.
  • Industrial/logistics: Operator color was resilient, on Property Profits, David Murphy noted that a year ago Florida had "seven buildings of a million square feet or larger… sitting empty. Today, they're all gone."
  • Freight: FTR | State of Freight flagged truck volumes "more than 37% higher than… last year," but the 24-week flatbed spot-rate rally finally broke, a small caution flag under otherwise firm warehouse demand.

What changed

Two things moved the forward picture. First, the turbine market re-priced again, GEV CCGT pricing roughly doubled inside a year and the book is now sold out to 2029, a tighter window than the Street was modeling a quarter ago. Second, the behind-the-meter trend went from one-off to pattern: with two more hyperscaler-E&P power deals telegraphed before Labor Day, "build your own power plant next to the data center" is now the base case, not the exception. Watch whether the next two land, that's the catalyst that re-rates the power-equipment names and reframes the grid-bottleneck debate.