"We Have Problems": Larry Fink Identifies a Weakness in the U.S. AI Boom
According to the head of BlackRock, the U.S. needs to invest hundreds of billions of dollars in modernizing and expanding its energy infrastructure / Photo: X / BlackRock
The U.S.’s outdated and decentralized power grid is unable to allocate resources effectively: Larry Fink, CEO of BlackRock, the world’s largest investment firm, considers this the main threat to the development of artificial intelligence. Hundreds of billions of dollars will be needed to address infrastructure problems and further develop AI. Fink made this statement in an interview with CNN while analyzing the situation in the U.S. AI sector.
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The sharp rise in the stock prices of companies that have benefited from the AI boom has heightened concerns that the market is overvaluing their future prospects. BlackRock CEO Larry Fink sees the situation differently: in his view, the current surge in the stock prices of certain companies is largely due to a shortage of the resources needed for the industry’s development.
"The rapid, explosive growth of certain companies and their stock prices is largely due to the fact that we are facing shortages in many segments of AI infrastructure—from memory chips to electricity. These companies can sell their chips and other products at prices several times higher than just two years ago.”
Fink acknowledges that, over time, new technologies may help alleviate part of the chip shortage. He considers the lack of computing power and the state of the U.S. power grid to be a more fundamental problem: the existing infrastructure does not allow for the efficient distribution of electricity.
"Artificial intelligence is just a collection of electrons. And generating them requires energy. And if we don't have distribution networks to transmit that energy, we're in trouble."
According to Bloomberg, about 70% of power lines in the U.S. have been in operation for more than 25 years, and the average age of large power transformers is about 40 years. There is no single national power grid: the U.S. is divided into three major power systems, coordinated by seven regional operators, with thousands of utility companies responsible for power delivery.
"Europe has a unified power grid, even though they are facing supply challenges. Here, thanks to natural gas, we have a surplus of energy, but we are unable to distribute it effectively."
The construction of new power transmission lines in the U.S. is proceeding slowly: according to Bloomberg, due to numerous approval processes involving federal and local authorities, regulators, and landowners, it takes an average of about ten years to complete a major project. The commissioning of new generating capacity is also being delayed: by the end of 2025, more than 8,000 projects with a total capacity of nearly 1.3 TW were awaiting the opportunity to begin supplying electricity to the grid. This volume is comparable to the entire existing generating capacity of the United States.
"According to current estimates, we will have to invest hundreds of billions of dollars in modernizing and expanding our energy grid. If we don't do this, we won't see any success in the field of AI."
This article was AI-translated and verified by a human editor
