A Grok investor said he's "deeply concerned" about the "speculative" data center market. Myung J. Chun / Los Angeles Times via Getty Images A Groq investor said he's "deeply concerned" about the "speculative" data center market. He said AI has spurred "too many business models with no realistic margin expansion." The number of data centers in the US has nearly quadrupled from 2010 to the end of 2024. A major Groq investor said data center development was "speculative" and would put "stress on the system." Alex Davis, the CEO of Austin-based investment company Disruptive Tech, sounded an alarm about the US data center market in an end-of-year letter to investors on Monday. He said he was concerned about landlords who were building data centers based on speculation about future demand. "I am also deeply concerned about the 'speculative' data center market," Davis wrote in his letter. "The 'build it and they will come' strategy is a trap. If you are a hyperscaler, you will own your own data centers." He said he predicted a "significant financing crisis in 2027-2028 for speculative landlords." "We want to back the owner/users, not the speculative landlords, and we are quite concerned for their stress on the system," Davis added. In a similar letter on LinkedIn, Davis also talked about data centers, and said AI has spurred "too many business models with no realistic margin expansion." "This will not end well," he added on LinkedIn. Disruptive Tech has backed Groq, an AI hardware startup. In a press release in September in which it announced a $750 million capital raise, Groq said Disruptive Tech had invested nearly $350 million in the company. The release also said that Disruptive Tech had invested in Airbnb, Spotify, and Slack, as well as AI-forward companies like Shield AI, Palantir, and Databricks. This funding round took place shortly before Groq signed a $20 billion licensing deal with Nvidia in November. Davis's comments about data centers come as tech companies are spending billions of dollars on their construction. A Business Insider investigation into the US's data centers in June showed that at the end of 2024, companies had filed permits for 1,240 existing or planned data centers. This was nearly four times the number of permits in 2010. These centers, which store, process, and distribute large amounts of data, use massive amounts of land, water, and electricity. Cities give companies tax incentives to build data centers, spurring the rate of their construction. Read the original article on Business Insider