Microsoft's Satya Nadella has revealed the situation regarding the firm's AI GPU arsenal, claiming that there isn't enough space or energy available to bring additional compute power onboard.

Recently, a thesis has emerged suggesting that NVIDIA and the AI industry will ultimately reach a point where there's excess computing, or the per-unit compute achievements gained by employing AI chips won't be sustainable for Big Tech. Commenting on NVIDIA's CEO mentioning about excess compute being 'non existent' for the next two to three years, Microsoft's CEO Satya Nadella believes (via BG2 podcast) that the industry is currently facing a 'power glut', which leads to AI chips sitting in inventory that cannot be "plugged in", so basically, another form of a compute glut.

I mean, even the point is, what's the secular trend? The secular trend is what Sam said, which is at the end of the day, because quite frankly, the biggest issue we are now having is not a compute glut, but it's a power.

So if you can't do that, you may actually have a bunch of chips sitting in inventory that I cannot plug in. In fact, that is my problem today, right? It's not a supply issue of chips. It's actually the fact that I don't have warm shells to plug into.

Well, it's clear that the race for a compute buildout has reached a point where companies like Microsoft cannot accommodate additional chips in their respective configurations. The underlying reason why Nadella mentions a power glut is that with each generation, NVIDIA's rack-scale configurations have brought in massive power requirements, to such an extent that from Ampere to the next-gen Kyber rack design, rack TDPs are expected to increase by 100 times.

When examining scaling laws and NVIDIA's efforts to advance architectural capabilities, it is certain that the industry will eventually encounter a roadblock where the energy infrastructure will not allow for the expansion of data centers. And, by the statement from Microsoft's CEO, the energy-compute constraint is already being witnessed. This is a concern being discussed by several experts; however, the efforts made to scale up the energy infrastructure are currently insufficient.

Would the lack of energy lead to NVIDIA's chips not being sold? Well, Satya actually answered this, claiming that the demand in the short term is difficult to predict and is subject to how the supply chain progresses.