The AI-fueled datacenter boom continues apace, with Google parent Alphabet moving to acquire energy and infrastructure biz Intersect, while Elon Musk's xAI is reportedly planning to expand beyond its already huge complex in Tennessee.

As we enter a new year, one thing seems set to continue, and that is the race to acquire more datacenter capacity for the development and operation of ever larger AI models.

Alphabet says it has inked a definitive agreement to acquire Intersect for $4.75 billion in cash, plus the assumption of its debts. Google already has a minority stake in the firm from an earlier funding round.

The move will provide Google with access to Intersect's "multiple gigawatts" of energy resources and the datacenter projects it has under development, while Intersect claimed that it is exploring a range of emerging technologies to diversify energy supplies.

However, Intersect is set to remain a separate brand from Alphabet and Google, and will continue to be led by the current chief exec, Sheldon Kimber.

And it appears that Google won't even get all of Intersect's assets with this deal. Those located in Texas and in California are to be acquired by existing investors and run as a separate company. This will continue to construct new assets, including the world's largest battery energy storage system (BESS), according to Kimber.

However, the pair insist that the deal will enable the further buildout of datacenter infrastructure without, they claim, passing on costs to grid customers.

"Intersect will help us expand capacity, operate more nimbly in building new power generation in lockstep with new datacenter load, and reimagine energy solutions to drive US innovation and leadership," said Google and Alphabet CEO Sundar Pichai.

In a blog post, Kimber said that the merger is a logical extension of the existing partnership between the two firms.

"The truth is that modern energy infrastructure now sits at the center of American competitiveness in AI. And we share a deep conviction that energy innovation, community investment, and responsible use of resources are the pillars of what must come next," he said.

"AI today is stuck behind one of the slowest, oldest industries in the country: electric power. The country has racks full of GPUs that can't be energized because there isn't enough electricity for them," Kimber added, saying that the grid as it stands is "not built for the AI era."

Meanwhile, Musk's operation, xAI, is said to be constructing a third facility to house more of its infrastructure. In a post on X, the social media site formerly known as Twitter, he claimed that xAI has acquired a building that will allow it to expand its training compute resources to almost 2 GW of capacity.

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According to other reports, this third facility comprises a large warehouse at Southaven, Mississippi, over the border from its existing site at Memphis, Tennessee. We asked xAI for confirmation.

All of this frenetic expansion belies the spreading disquiet in the industry that the AI gravy train could run off the rails soon. Many of the big players are engaged in circular deals whereby IT companies invest billions in them, cash that they then use to buy the infrastructure they need from those same companies.

Many investors are also starting to question whether AI products will ever generate enough revenue to pay off all this investment. One research firm also claims that large organizations are set to defer a large chunk of planned AI spending until 2027 because of the current gap between vendor promises and reality. ®