Famed short-seller Jim Chanos has publicly cast doubt on the explosive growth projected for the artificial intelligence (AI) data center market, taking a direct shot at a bullish report from asset management giant Brookfield.
Chanos Bets Against The AI Hype
In a social media post, Chanos responded to Brookfield’s forecast of a more than tenfold increase in AI data center capacity by 2034, simply stating, “I’ll take the ‘under’.”
The challenge was aimed at Brookfield’s “Building the Backbone of AI” report, which outlines a massive buildout of the physical infrastructure needed to power the next industrial revolution.
The report projects that total AI data center capacity will surge from 7 GW in 2024 to 82 GW by 2034, a 28% compound annual growth rate. Brookfield estimates this represents a staggering $7 trillion investment opportunity across AI factories, power, and compute infrastructure over the next decade.
Brookfield Projects A $7 Trillion AI Investment Opportunity
Brookfield's optimistic case is partially built on the Jevons Paradox, which posits that as technology becomes more efficient, its overall consumption increases.
“More efficiency in AI is going to drive more demand for AI,” said Connor Teskey, President of Brookfield Asset Management.
“We see very little chance of overbuilding at this point”. The report asserts that sovereign demand and the race for nationalized computing power will continue to fuel this expansion.
Challenges In AI Capacity Buildout
The Brookfield report itself acknowledges significant hurdles, including grid constraints, where securing a grid connection can take up to 10 years, and the risk of technology obsolescence as AI hardware evolves rapidly.
Chanos' concise rebuttal, while not detailing a full thesis, leverages his reputation for identifying market overexuberance. His skepticism suggests that the prevailing AI hype may be inflating expectations for the infrastructure buildout.
The short seller’s bet against the forecast signals a classic Wall Street divergence between a long-term, growth-oriented investor and a noted bear wary of a potential bubble.
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