Dell says AI data center buildout will hit a ceiling. For real estate and construction, the constraint is clear: power.
Michael Dell sees a saturation point ahead for AI data centers. Not today, but eventually. Demand is "tremendous," yet the limiting factor isn't land or capital-it's electricity.
His company's server and networking business grew 58% last year and 69% last quarter, with AI servers powered by Nvidia's Blackwell Ultra chips moving fast to buyers like CoreWeave and xAI. Dell expects about $20 billion in AI server shipments in fiscal 2026-double last year.
What Dell is hearing from buyers
Power is the choke point. "Many customers…will tell us, 'Well, don't deliver it until this day because we won't have power in the building to support it.'" The math is simple: "If you're going to generate tens of trillions of tokens…you're going to need computing power and energy."
Jeff Bezos is thinking beyond Earth, projecting space-based data centers that tap constant solar and could beat the cost of terrestrial builds in a couple of decades. Interesting future. But your bids and schedules live on the current grid.
What this means for developers, GCs, and specialty trades
- Site selection now starts with megawatts, not zip codes. Prioritize parcels with proximity to 230-500 kV transmission, substation expandability, and realistic interconnection timelines. Map the interconnection queue before you model rent.
- Expect long utility lead times (18-48 months) and plan for phased energization. Lock in early with letters of intent for transformers, switchgear, generators, and chillers. Consider vendor-managed inventory to de-risk critical path items.
- Design for density. Racks at 30-100+ kW push liquid cooling, higher floor loads, and tighter thermal envelopes. Validate slab capacity, ceiling clear heights, and structural pathways for manifolds and piping from day one.
- Water is a reputational and permitting risk. Where feasible, favor closed-loop or refrigerant-based systems, dry coolers, and heat reuse agreements with district heating or nearby industrial users.
- Power procurement becomes a project workstream. Layer utility service with PPAs, on-site generation, and batteries for peak shaving and resilience. Gas turbines and microgrids can bridge-subject to local air and noise constraints.
- Zoning and community outcomes matter. Expect scrutiny on noise, traffic, heat plumes, and visual screening. Budget for community benefits and transparent operations to speed approvals.
- Brownfield can move faster. Industrial shells with clear heights, truck courts, and existing utility corridors reduce time to revenue. Verify easements, fault current limits, and expansion rights early.
- Lease structures will shift. Tie rent and TI draw schedules to energization milestones. Include flexibility for density upgrades and liquid cooling retrofits without wholesale redesign.
- Beware localized oversupply. Dell expects an eventual buildout peak. Track absorption, grid commitments, and tenant backlogs to avoid stranded assets in overbuilt pockets.
Numbers to anchor your pro forma
- Server demand is surging: Dell projects $20B in AI server shipments in fiscal 2026, with recent quarterly growth at 69%.
- Chip class matters: Nvidia's Blackwell class drives higher rack densities and liquid cooling adoption-design for it now, not later.
- Grid strain is real: Global analysis points to data center electricity use climbing, with regional hotspots pressing grid limits. See the International Energy Agency's overview here.
Practical next steps (3-12 months)
- Run a grid-first site screen: available MW, interconnection queue position, upgrade scope, and realistic in-service dates.
- Pre-buy the long-leads: HV transformers, medium-voltage switchgear, UPS, gensets, chillers, cooling distribution units, and liquid cooling components.
- Engineer for modularity: standardized power rooms, skids, and scalable cooling to align capacity releases with energization phases.
- Secure dual-feed and fault tolerance early: clarify utility protection schemes, arc flash ratings, and testing windows with AHJs and utilities.
- Negotiate energy with your dirt: LOIs should address power rights, substation footprints, easements, and expansion options alongside land terms.
About that space talk
Bezos predicts large solar-fed data centers in orbit over the next couple of decades. It's a bold horizon, but it won't solve your 2026 delivery. The opportunity on Earth is clear: sites with dependable megawatts, fast permits, and designs that absorb higher density.
Bottom line
There's no immediate sign of overbuild, but the ceiling will come from the grid, not demand. Teams that secure power, shorten lead times, and design for density will win the next wave of AI deals-and avoid holding dark shells waiting for electrons.
If you're upskilling teams to pursue AI-heavy projects and understand client needs, explore curated learning by role at Complete AI Training.
