Keynote Speaker: Anthony Wanger, CEO & Founder, Regnaw Capital
Traditional data centers have been designed to run CPUs, but the more recent builds are centered around GPUs which have a different architecture, Tony Wanger, CEO & Founder, Regnaw Capital told audience members during his keynote address at the Mizuho Insights Symposium: A Holistic View of Data Centers. In order to run computationally intensive programs to create generative AI, the core area where the compute is processed needs to be isolated and paralleled, which is distinct from CPU builds.
Models, Inference, AI, M&A
Investors will want to see a return on the billions of dollars technology companies are spending on the digital buildout but how long will they wait? Moderated by Jennifer Fritzsche, Managing Director, Technology, Media & Telecom, Mizuho | Greenhill, the panel “Models, Inference, AI, M&A” discussed the development of AI models and why companies are dedicated to building out the infrastructure during the symposium. The infrastructure needed for the digital revolution can be likened to roadways, tunnels and bridges being built, Jordan Klein, Managing Director, U.S. Equity Sales Trading, Mizuho Americas said, adding that individual cars on the road equate to “inferencing” models which will vary in function, speed and size. Meanwhile, M&A is likely to continue to be active in the sector as consolidation is expected across the technology stack, Aravind Natarajan, Managing Director, Technology, Media & Telecom, Mizuho | Greenhill told symposium attendees.
With Great "Power" Comes Great Ideas
Demand for electricity to power data centers has seen staggering growth that will unlikely be met by renewable energy, Martin Noriega, Director, Power & Utilities, Mizuho | Greenhill said. Notwithstanding all of the power needed for new data center projects, there’s already a backlog of renewable power projects awaiting connection to the grid. Natural gas fired generation will pick up the slack, Paul McNutt, Head of Power, Energy & Infrastructure for Mizuho | Greenhill said, noting that there has been a “180” in the view of natural gas as a clean source of power because it’s a necessary factor in winning at AI. Nuclear power will also move toward the top of the generation stack, said Tom Widener, Managing Director, Power & Utilities, Mizuho | Greenhill, because it provides non-interruptible power in a zero-carbon fuel.
Capitalizing the Build
The capital markets have to remain open in order to proceed with financing massive data center projects, Ryan Atkinson, Chief Credit Officer, Mizuho Americas told symposium members. To have the banks absorb what is likely a $500 billion spend to develop data centers would be “virtually impossible,” he added. To that end, capital markets are ready and willing to take on the challenge, Xavier Auge, Executive Director, Structured Credit Group, Mizuho | Greenhill said during the panel discussion. It’s a natural place for banks to offload debt after they finance the construction, and with expectations for stable long-term returns, could tap a variety of markets including ABS, 144A Reg S and CMBS, among other markets, Auge said. Private credit can function as a lender in more speculative type builds such as with a pre-lease construction project, Sarah Kanes, Managing Director, Real Estate, Mizuho | Greenhill said. In terms of private equity, they will likely continue to want to support development of data centers given the success of current investments, Kanes added.
The International View
The model for data center build in the major four Latin American economies mimics that of the United States with some 80% of the growth coming from hyperscalers, said Fernando Soriano, Head of Latin America, Mizuho | Greenhill. In Europe, investors are considering where to put their money be it in top, established markets or developing ones like Spain, Italy and Portugal, though the lack of comparable regulations, power infrastructure and data privacy guidelines are a consideration, said Stancel Riley, Co-Head of Financial Sponsors & Strategic Solutions Group, Mizuho | Greenhill. AirTrunk was a defining transaction in Asia, serving markets in Australia and Singapore, but projects tend to be smaller, Riley added. Canadian pension and infrastructure funds have trillions of dollars to invest with and data centers are currently at the top of their list of investments, Mike Comisarow, Managing Director, Power & Utilities Canada, Mizuho | Greenhill told the audience.
To read more on data center insights, please click here.