A prominent investor in Groq has issued a stark warning about the current state of the U.S. data center market, calling it “speculative” and potentially unsustainable. Alex Davis, CEO of Austin-based investment firm Disruptive Tech, expressed deep concern in an end-of-year letter to investors, cautioning that the rapid expansion of data center construction could lead to a major financing crisis. Davis highlighted what he described as a dangerous “build it and they will come” mentality among landlords investing heavily in data centers based on anticipated demand from AI-driven tech companies. “I am also deeply concerned about the ‘speculative’ data center market,” he wrote. “The ‘build it and they will come’ strategy is a trap. If you are a hyperscaler, you will own your own data centers.” He predicted that speculative landlords—those building facilities without guaranteed long-term tenants—could face a significant financing crunch between 2027 and 2028. “We want to back the owner/users, not the speculative landlords, and we are quite concerned for their stress on the system,” Davis added. The concerns were echoed in a separate post on LinkedIn, where Davis criticized the proliferation of AI-related business models that lack realistic paths to profitability. “AI has spurred too many business models with no realistic margin expansion,” he wrote. “This will not end well.” Disruptive Tech is a major backer of Groq, the AI hardware startup known for its high-speed processors. In September, Groq announced a $750 million funding round, with Disruptive Tech contributing nearly $350 million. The company also disclosed investments in Airbnb, Spotify, Slack, Shield AI, Palantir, and Databricks—highlighting its focus on transformative technology. The funding round occurred just before Groq secured a landmark $20 billion licensing agreement with Nvidia in November, underscoring the growing momentum behind AI infrastructure. Davis’s remarks come amid a surge in data center construction across the United States. A Business Insider investigation in June revealed that by the end of 2024, companies had filed permits for 1,240 data centers—nearly four times the number in 2010. These facilities, essential for storing, processing, and distributing vast data sets, require enormous amounts of land, water, and electricity. Many cities offer tax incentives to attract developers, accelerating the pace of construction. With AI demand driving massive infrastructure investments, Davis’s warning serves as a cautionary note about the risks of overbuilding and overreliance on speculative growth in the data center sector.