Big tech spending on AI data centers and infrastructure vs the fiber optic buildout during the dot-com boom (& bust)
Big Tech plans to spend between $364 billion and $400 billion on AI data centers, purchasing specialized AI hardware like GPUs, and supporting cloud computing/storage capacity. The final 2Q 2025 GDP report, released last week, reveals a surge in data center infrastructure spending from $9.5 billion in early 2020 to $40.4 billion in the second quarter of 2025. It’s largely due to an unprecedented investment boom driven by artificial intelligence (AI) and cloud computing. The increase highlights a monumental shift in capital expenditure by major tech companies.
Yet there are huge uncertainties about how far AI will transform scientific discovery and hypercharge technological advance. Tech financial analysts worry that enthusiasm for AI has turned into a bubble that is reminiscent of the mania around the internet’s infrastructure build-out boom from 1998-2000. During that time period, telecom network providers spent over $100 billion blanketing the country with fiber optic cables based on the belief that the internet’s growth would be so explosive that such massive investments were justified. The “talk of the town” during those years was the “All Optical Network,” with ultra-long haul optical transceiver, photonic switches and optical add/drop multiplexers. 27 years later, it still has not been realized anywhere in the world.
The resulting massive optical network overbuilding made telecom the hardest hit sector of the dot-com bust. Industry giants toppled like dominoes, including Global Crossing, WorldCom, Enron, Qwest, PSI Net and 360Networks.
However, a key difference between then and now is that today’s tech giants (e.g. hyperscalers) produce far more cash than the fiber builders in the 1990s. Also, AI is immediately available for use by anyone that has a high speed internet connection (via desktop, laptop, tablet or smartphone) unlike the late 1990s when internet users (consumers and businesses) had to obtain high-speed wireline access via cable modems, DSL or (in very few areas) fiber to the premises.
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Today, the once boring world of chips and data centers has become a raging multi-hundred billion dollar battleground where Silicon Valley giants attempt to one up each other with spending commitments—and sci-fi names. Meta CEO Mark Zuckerberg teased his planned “Hyperion” mega-data center with a social-media post showing it would be the size of a large chunk of Manhattan.
OpenAI’s Sam Altman calls his data-center effort “Stargate,” a reference to the 1994 movie about an interstellar time-travel portal. Company executives this week laid out plans that would require at least $1 trillion in data-center investments, and Altman recently committed the company to pay Oracle an average of approximately $60 billion a year for AI compute servers in data centers in coming years. That’s despite Oracle is not a major cloud service provider and OpenAI will not have the cash on hand to pay Oracle.
In fact, OpenAI is on track to realize just $13 billion in revenue from all its paying customers this year and won’t be profitable till at least 2029 or 2030. The company projects its total cash burn will reach $115 billion by 2029. The majority of its revenue comes from subscriptions to premium versions of ChatGPT, with the remainder from selling access to its models via its API. Although ~ 700 million people—9% of the world’s population—are weekly users of ChatGPT (as of August, up from 500 million in March), its estimated that over 90% use the free version. Also this past week:
- Nvidia plans to invest up to $100 billion to help OpenAI build data center capacity with millions GPUs.
- OpenAI revealed an expanded deal with Oracle and SoftBank , scaling its “Stargate” project to a $400 billion commitment across multiple phases and sites.
- OpenAI deepened its enterprise reach with a formal integration into Databricks — signaling a new phase in its push for commercial adoption.
Nvidia is supplying capital and chips. Oracle is building the sites. OpenAI is anchoring the demand. It’s a circular economy that could come under pressure if any one player falters. And while the headlines came fast this week, the physical buildout will take years to deliver — with much of it dependent on energy and grid upgrades that remain uncertain.
Another AI darling is CoreWeave, a company that provides GPU-accelerated cloud computing platforms and infrastructure. From its founding in 2017 until its pivot to cloud computing in 2019, Corweave was an obscure cryptocurrency miner with fewer than two dozen employees. Flooded with money from Wall Street and private-equity investors, it has morphed into a computing goliath with a market value bigger than General Motors or Target.
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Massive AI infrastructure spending will require tremendous AI revenue for pay-back:
David Cahn, a partner at venture-capital firm Sequoia, estimates that the money invested in AI infrastructure in 2023 and 2024 alone requires consumers and companies to buy roughly $800 billion in AI products over the life of these chips and data centers to produce a good investment return. Analysts believe most AI processors have a useful life of between three and five years.
This week, consultants at Bain & Co. estimated the wave of AI infrastructure spending will require $2 trillion in annual AI revenue by 2030. By comparison, that is more than the combined 2024 revenue of Amazon, Apple, Alphabet, Microsoft, Meta and Nvidia, and more than five times the size of the entire global subscription software market.
Morgan Stanley estimates that last year there was around $45 billion of revenue for AI products. The sector makes money from a combination of subscription fees for chatbots such as ChatGPT and money paid to use these companies’ data centers. How the tech sector will cover the gap is “the trillion dollar question,” said Mark Moerdler, an analyst at Bernstein. Consumers have been quick to use AI, but most are using free versions, Moerdler said. Businesses have been slow to spend much on AI services, except for the roughly $30 a month per user for Microsoft’s Copilot or similar products. “Someone’s got to make money off this,” he said.
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Why this time is different (?):
AI cheerleaders insist that this boom is different from the dot-com era. If AI continues to advance to the point where it can replace a large swath of white collar jobs, the savings will be more than enough to pay back the investment, backers argue. AI executives predict the technology could add 10% to global GDP in coming years.
“Training AI models is a gigantic multitrillion dollar market,” Oracle chairman Larry Ellison told investors this month. The market for companies and consumers using AI daily “will be much, much larger.”
The financing behind the AI build-out is complex. Debt is layered on at nearly every level. his “debt-fueled arms race” involves large technology companies, startups, and private credit firms seeking innovative ways to fund the development of data centers and acquire powerful hardware, such as Nvidia GPUs. Debt is layered across different levels of the AI ecosystem, from the large tech giants to smaller cloud providers and specialized hardware firms.
Alphabet, Microsoft, Amazon, Meta and others create their own AI products, and sometimes sell access to cloud-computing services to companies such as OpenAI that design AI models. The four “hyperscalers” alone are expected to spend nearly $400 billion on capital investments next year, more than the cost of the Apollo space program in today’s dollars. Some build their own data centers, and some rely on third parties to erect the mega-size warehouses tricked out with cooling equipment and power.
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Echoes of bubbles past:
History is replete with technology bubbles that pop. Optimism over an invention—canals, electricity, railroads—prompts an investor stampede premised on explosive growth. Overbuilding follows, and investors eat giant losses, even when a new technology permeates the economy. Predicting when a boom turns into a bubble is notoriously hard. Many inflate for years. Some never pop, and simply stagnate.
The U.K.’s 19th-century railway mania was so large that over 7% of the country’s GDP went toward blanketing the country with rail. Between 1840 and 1852, the railway system nearly quintupled to 7,300 miles of track, but it only produced one-fourth of the revenue builders expected, according to Andrew Odlyzko,PhD, an emeritus University of Minnesota mathematics professor who studies bubbles. He calls the unbridled optimism in manias “collective hallucinations,” where investors, society and the press follow herd mentality and stop seeing risks.
He knows from firsthand experience as a researcher at Bell Labs in the 1990s. Then, telecom giants and upstarts raced to speculatively plunge tens of millions of miles of fiber cables into the ground, spending the equivalent of around 1% of U.S. GDP over half a decade.
Backers compared the effort to the highway system, to the advent of electricity and to discovering oil. The prevailing belief at the time, he said, was that internet use was doubling every 100 days. But in reality, for most of the 1990s boom, traffic doubled every year, Odlyzko found.
The force of the mania led executives across the industry to focus on hype more than unfavorable news and statistics, pouring money into fiber until the bubble burst.
“There was a strong element of self interest,” as companies and executives all stood to benefit financially as long as the boom continued, Odlyzko said. “Cautionary signs are disregarded.”
Kevin O’Hara, a co-founder of upstart fiber builder Level 3, said banks and stock investors were throwing money at the company, and executives believed demand would rocket upward for years. Despite worrying signs, executives focused on the promise of more traffic from uses like video streaming and games.
“It was an absolute gold rush,” he said. “We were spending about $110 million a week” building out the network.
When reality caught up, Level 3’s stock dropped 95%, while giants of the sector went bust. Much of the fiber sat unused for over a decade. Ultimately, the growth of video streaming and other uses in the early 2010s helped soak up much of the oversupply.
Worrying signs:
There are growing, worrying signs that the optimism about AI won’t pan out.
- MIT Media Lab (2025): The “State of AI in Business 2025” report found that 95% of custom enterprise AI tools and pilots fail to produce a measurable financial impact or reach full-scale production. The primary issue identified was a “learning gap” among leaders and organizations, who struggle to properly integrate AI tools and redesign workflows to capture value.
- A University of Chicago economics paper found AI chatbots had “no significant impact on workers’ earnings, recorded hours, or wages” at 7,000 Danish workplaces.
- Gartner (2024–2025): The research and consulting firm has reported that 85% of AI initiatives fail to deliver on their promised value. Gartner also predicts that by the end of 2025, 30% of generative AI projects will be abandoned after the proof-of-concept phase due to issues like poor data quality, lack of clear business value, and escalating costs.
- RAND Corporation (2024): In its analysis, RAND confirmed that the failure rate for AI projects is over 80%, which is double the failure rate of non-AI technology projects. Cited obstacles include cost overruns, data privacy concerns, and security risks.
OpenAI’s release of ChatGPT-5 in August was widely viewed as an incremental improvement, not the game-changing thinking machine many expected. Given the high cost of developing it, the release fanned concerns that generative AI models are improving at a slower pace than expected. Each new AI model—ChatGPT-4, ChatGPT-5—costs significantly more than the last to train and release to the world, often three to five times the cost of the previous, say AI executives. That means the payback has to be even higher to justify the spending.
Another hurdle: The chips in the data centers won’t be useful forever. Unlike the dot-com boom’s fiber cables, the latest AI chips rapidly depreciate in value as technology improves, much like an older model car. And they are extremely expensive.
“This is bigger than all the other tech bubbles put together,” said Roger McNamee, co-founder of tech investor Silver Lake Partners, who has been critical of some tech giants. “This industry can be as successful as the most successful tech products ever introduced and still not justify the current levels of investment.”
Other challenges include the growing strain on global supply chains, especially for chips, power and infrastructure. As for economy-wide gains in productivity, few of the biggest listed U.S. companies are able to describe how AI was changing their businesses for the better. Equally striking is the minimal euphoria some Big Tech companies display in their regulatory filings. Meta’s 10k form last year reads: “[T]here can be no assurance that the usage of AI will enhance our products or services or be beneficial to our business, including our efficiency or profitability.” That is very shaky basis on which to conduct a $300bn capex splurge.
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Conclusions:
Big tech spending on AI infrastructure has been propping up the U.S. economy, with some projections indicating it could fuel nearly half of the 2025 GDP growth. However, this contribution primarily stems from capital expenditures, and the long-term economic impact is still being debated. George Saravelos of Deutsche Bank notes that economic growth is not coming from AI itself but from building the data centers to generate AI capacity.
Once those AI factories have been built, with needed power supplies and cooling, will the productivity gains from AI finally be realized? How globally disseminated will those benefits be? Finally, what will be the return on investment (ROI) for the big spending AI companies like the hyperscalers, OpenAI and other AI players?
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References:
https://www.wsj.com/tech/ai/ai-bubble-building-spree-55ee6128
https://www.ft.com/content/6c181cb1-0cbb-4668-9854-5a29debb05b1
https://www.cnbc.com/2025/09/26/openai-big-week-ai-arms-race.html
Gartner: AI spending >$2 trillion in 2026 driven by hyperscalers data center investments
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Initiatives and Analysis: Nokia focuses on data centers as its top growth market
SK Telecom forms AI CIC in-house company to pursue internal AI innovation
SK Telecom (SKT) is establishing an in-house independent company (CIC) that consolidates its artificial intelligence (AI) capabilities. Through AI CIC, SK Telecom plans to invest approximately 5 trillion won (US$3.5 billion) in AI over the next five years and achieve annual sales of over 5 trillion won ($3.5 billion) by 2030.
On September 25th, SK Telecom CEO Ryu Young-sang held a town hall meeting for all employees at the SKT Tower Supex Hall in Jung-gu, Seoul, announcing the launch of AI CIC to pursue rapid AI innovation. Ryu will concurrently serve as the CEO of SK CIC. SK Telecom plans to unveil detailed organizational restructuring plans for AI CIC at the end of October this year.
“We are launching AI CIC, a streamlined organizational structure, and will simultaneously pursue internal AI innovation, including internal systems, organizational culture, and enhancing employees’ AI capabilities. We will grow AI CIC to be the main driver of SK’s AI business and, furthermore, the core that leads the AI business for the entire SK Group. The AI CIC will establish itself as South Korea’s leading AI business operator in all fields of AI, including services, platforms, AI data centers and proprietary foundation models,” Ryu said.
The newly established AI CIC will be responsible for all the company’s AI-related functions and businesses. It is expected that SK Telecom’s business will be divided into mobile network operations (MNO) and AI, with AI CIC consolidating related businesses to enhance operational efficiency. Furthermore, AI CIC will actively participate in government-led AI projects, contributing to the establishment of a government-driven AI ecosystem. SKT said that reorganizing its services under one umbrella will “drive AI innovation that enhance business productivity and efficiency.”
“Through this (AI CIC), we will play a central role in building a domestic AI-related ecosystem and become a company that contributes to the success of the national AI strategy,” Ryu said.
By integrating and consolidating dispersed AI technology assets, SKT plans to strengthen the role of the “AI platform” that supports AI technology/operations across the entire SK Group, including SKT, and also pursue a strategy to secure a flexible “AI model” to respond to the diverse AI needs of the government, industry, and private sectors.
In addition, SKT will accelerate the development of future growth areas (R&D) such as digital twins and robots, and the expansion of domestic and international partnerships based on AI full-stack capabilities.
Ryu Young-sang, CEO of SK Telecom, unveils the plans for the AI CIC
CEO Ryu said, “SK Telecom has secured various achievements such as securing 10 million Adot (AI enabled) subscribers, selecting an independent AI foundation model, launching the Ulsan AI DC, and establishing global partnerships through its transformation into an AI company over the past three years, and has laid the foundation for future leaps forward. We will achieve another AI innovation centered around the AI CIC to restore the trust of customers and the market and advance into a global AI company.”
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References:
https://www.businesskorea.co.kr/news/articleView.html?idxno=253124
SKT-Samsung Electronics to Optimize 5G Base Station Performance using AI
SK Telecom unveils plans for AI Infrastructure at SK AI Summit 2024
SK Telecom (SKT) and Nokia to work on AI assisted “fiber sensing”
SK Telecom and Singtel partner to develop next-generation telco technologies using AI
SK Telecom, DOCOMO, NTT and Nokia develop 6G AI-native air interface
South Korea has 30 million 5G users, but did not meet expectations; KT and SKT AI initiatives
Verizon’s 6G Innovation Forum joins a crowded list of 6G efforts that may conflict with 3GPP and ITU-R IMT-2030 work
Verizon has established a 6G Innovation Forum with a group of companies to drive innovation and enabling the 6G era. Verizon’s future-forward initiative is uniting key players across the technology ecosystem, including leading network vendors Ericsson, Samsung Electronics, and Nokia; and device and chipset innovators Meta, and Qualcomm Technologies, Inc., in the early stages of development to define 6G together by identifying potential new use cases, devices and network technology. The forum aims to establish an open, diversified, and resilient 6G ecosystem and develop foundational 6G technologies while ensuring global alignment.
This effort underscores Verizon’s commitment to drive the collaborative evolution of connectivity and deliver transformative experiences for consumers and enterprises. Verizon’s networks form the backbone of the emerging Artificial Intelligence economy, delivering the infrastructure and expertise essential for businesses to fully harness AI’s potential. For over a decade, Verizon has integrated AI into its operations to optimize network performance and infrastructure, a commitment that will continue with the evolution of 6G. This will accelerate Verizon’s AI Connect strategy and intelligent edge capabilities, enabling businesses to manage real-time AI workloads at scale by leveraging Verizon’s comprehensive suite of solutions with its award-winning network.
The forum will move beyond theoretical discussions and rapidly progress toward tangible 6G advancements and the realization of potential new and innovative use cases. Key areas of focus will include:
- Unlocking the full potential of 6G by testing new spectrum bands and bandwidths.
- Fostering a globally harmonized 6G landscape by actively working with global standards bodies like 3GPP to ensure that the forum’s work aligns with mainstream 6G development and promotes interoperability across the industry.
- Allowing forum partners to test and refine 6G technologies in a real-world environment by establishing dedicated Verizon 6G Labs, starting in Los Angeles, to serve as hubs for collaborative research, prototyping, and early lab and field trials.
“Verizon is consistently at the forefront of network innovation. We were the first in the world to turn up 5G and continue to enhance our best, most reliable and fastest 5G network in ways that open the door to possibilities far beyond what we can imagine today,” said Joe Russo, EVP & President, Global Networks and Technology at Verizon. “5G Advanced lays the foundation for the 6G future – whether that’s new wearables, AI experiences, or entirely new use cases we haven’t even thought of yet, and that’s what excites me the most. With the best team in the industry, we will build the future of these solutions with our partners. We’re already building a network designed for the next era – one that will transform how we live, work and play.”
Yago Tenorio, the chief technology officer of Verizon told Light Reading he wants the Forum to identify and refine 6G use cases before technology details are agreed upon by 3GPP and ITU-R WP5D. Smart glasses combined with artificial intelligence (AI) have arguably emerged as the prime candidate to succeed smartphones as a mass-market 6G consumer gadget. Last week, displayed the sort of smart glasses that could become popular in a future 6G scenario.
“One example of why this forum matters is that if you go to the standards today there is a lot of talk about uplink capacity with eight antennas in the device,” Tenorio said . “I don’t have any problem with that. It’s going to be very useful for FWA [fixed wireless access] and maybe useful for some smartphones, some classes of devices. But can you imagine a wearable with eight antennas? I mean, it’s difficult enough to have two,” he added.
Comment and Analysis:
It seems there are way too many 6G Forums and Consortiums that overlap and potentially can generate conflicting specifications. The two main bodies are ITU-R and 3GPP.
- ITU-R WP5D sets the formal requirements for terrestrial international mobile telecommunications (IMT) and is working on the framework for IMT-2030 (the official designation for 6G). This framework, outlined in the ITU-R’s IMT-2030 vision and Recommendation ITU-R M. 2160, includes key aspects like technology trends, usage scenarios, and performance capabilities for the next generation of mobile networks. 5D also develops the minimum technical performance requirements (TPRs) for IMT-2030 (“6G”) which will be specified in a Report ITU-R M. [IMT-2030.TECH PERF REQ]. In February 2025, WP5D discussed a draft document on these requirements, and the next step is to detail the specific values for key metrics like peak data rate and spectral efficiency, with candidates for the radio interfaces to be submitted by early 2029 and finalized around mid-2030.
- 3GPP creates cellular specifications which are submitted to ITU-R WP5D by ATIS as contributions directed towards Radio Interface Technologies (RITs) and Sets of Radio Interface Technologies (SRITs). 3GPP began its 6G study work in 2024. It is working toward a first-phase 6G specification to be completed in Release 21 by late 2028, which will be submitted for consideration as the IMT 2030 RIT/SRIT standard. Note that ONLY 3GPP defines the 5G and 6G core network specifications. There is no serious work in ITU-T for the non-radio aspects of 5G or 6G.
Summary of 6G Forums:
- Next G Alliance: An initiative within the Alliance for Telecommunications Industry Solutions (ATIS) to advance North American leadership in wireless technology. It includes working groups focused on creating a 6G roadmap, defining applications and use cases, and addressing spectrum issues.
- AI-RAN Alliance: This group brings together technology and telecom leaders to integrate artificial intelligence (AI) directly into radio access network (RAN) technology to improve network performance, efficiency, and resource utilization in the lead-up to 6G.
- Verizon 6G Innovation Forum: Established in September 2025, this consortium unites companies such as Ericsson, Nokia, Samsung, Meta, and Qualcomm to develop the 6G ecosystem, identify use cases, and define foundational technologies.
- Brooklyn 6G Summit (B6GS): An annual flagship event hosted by Nokia and NYU, bringing together vendors, academia, and operators to discuss 6G research and innovation.
- 6G Smart Networks and Services Industry Association (6G-IA): A European-based group that represents the private sector and collaborates with the European Commission on 6G research initiatives. It oversees projects like Hexa-X and Hexa-X-II, which have helped define the 6G vision.
- 6G Flagship (Finland): Based at the University of Oulu, this is one of the world’s first 6G research programs. It leads multiple national and international projects, working to develop the components, tools, and test network for a 6G-enabled digital world.
- one6G: This non-profit association works to accelerate the adoption of next-generation wireless technologies by supporting global 6G research and standardization.
- China IMT-2030 (6G) Promotion Group, established in 2019 by the Ministry of Industry and Information Technology (MIIT) to coordinate government, academia, and industry efforts in promoting 6G research, development, and international cooperation. The group focuses on defining technical standards, exploring new applications like integrated sensing and non-terrestrial networks, and aims for 6G commercialization around 2030.
- 6G Forum (Korea): An organization working to lead and promote the evolution of wireless technology beyond 5G and into 6G, encouraging collaboration between industries, government, and academia.
- Bharat 6G Alliance (India): A partnership between Indian companies, academia, and research organizations to accelerate the country’s innovation and collaboration in 6G.
- XG Mobile Promotion Forum (Japan): This group, which has a memorandum of understanding with the Next G Alliance, focuses on advancing the 5G and 6G ecosystem.
- IEEE Future Networks: This IEEE initiative includes a Testbed Working Group that collaborates with existing 5G testbeds to accelerate the development of next-generation networks, including 6G.
- Research initiatives: Numerous specific projects and academic consortia worldwide are also driving focused research on various aspects of 6G, such as integrating AI into networks or developing specific components.
- See References below for more collaborative efforts directed at 6G.
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References:
https://www.verizon.com/about/news/verizon-leads-future-wireless-development-new-industry-6g-forum
https://www.lightreading.com/6g/verizon-cto-worries-whether-6g-will-measure-up-in-the-us
Verizon launches 6G forum; it’s all about the use cases, CTO says
https://www.ericsson.com/en/6g/spectrum
ITU-R WP5D IMT 2030 Submission & Evaluation Guidelines vs 6G specs in 3GPP Release 20 & 21
ITU-R WP 5D reports on: IMT-2030 (“6G”) Minimum Technology Performance Requirements; Evaluation Criteria & Methodology
Highlights of 3GPP Stage 1 Workshop on IMT 2030 (6G) Use Cases
Ericsson and e& (UAE) sign MoU for 6G collaboration vs ITU-R IMT-2030 framework
ITU-R: IMT-2030 (6G) Backgrounder and Envisioned Capabilities
ITU-R WP5D invites IMT-2030 RIT/SRIT contributions
NGMN issues ITU-R framework for IMT-2030 vs ITU-R WP5D Timeline for RIT/SRIT Standardization
Qualcomm CEO: expect “pre-commercial” 6G devices by 2028
Qualcomm CEO: expect “pre-commercial” 6G devices by 2028
During his keynote speech at the 2025 Snapdragon Summit in Maui, Qualcomm CEO Cristiano Amon said:
“We have been very busy working on the next generation of connectivity…which is 6G. Designed to be the connection between the cloud and Edge devices, The difference between 5G and 6G, besides increasing the speeds, increasing broadband, increasing the amount of data, it’s also a network that has intelligence to have perception and sensor data. We’re going to have completely new use cases for this network of intelligence — connecting the edge and the cloud.”
“We have been working on this (6G) for a while, and it’s sooner than you think. We are ready to have pre-commercial devices with 6G as early as 2028. And when we get that, we’re going to have context aware intelligence at scale.”
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Analysis: Let’s examine that statement, in light of the ITU-R IMT 2030 recommendations not scheduled to be completed until the end of 2030:
“pre-commercial devices” are not meant for general consumers while “as early as” leaves open the possibility that those 6G devices might not be available until after 2028.
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Looking ahead at the future of devices, Amon noted that 6G would play a key role in the evolution of AI technology, with AI models becoming hybrid. This includes a combination of cloud and edge devices (like user interfaces, sensors, etc). According to Qualcomm, 6G will make this happen. Anon envisions a future where AI agents are a crucial part of our daily lives, upending the way we currently use our connected devices. He firmly believes that smartphones, laptops, cars, smart glasses, earbuds, and more will have a direct line of communication with these AI agents — facilitated by 6G connectivity.
Opinion: This sounds very much like the hype around 5G ushering a whole new set of ultra-low latency applications which never happened (because the 3GPP specs for URLLC were not completed in June 2020 when Release 16 was frozen). Also, very few mobile operators deployed 5G SA core, without which there are no 5G features, like network slicing and security.
Separately, Nokia Bell Labs has said that in the coming 6G era, “new man-machine interfaces” controlled by voice and gesture input will gradually replace more traditional inputs, like typing on touchscreens. That’s easy to read as conjecture, but we’ll have to see if that really happens when the first commercial 5G networks are deployed in late 2030- early 2031.
We’re sure to see faster network speeds with higher amounts of data with 6G with AI in more devices, but standardized 6G is still at least five years from being a commercial reality.
References:
https://www.androidauthority.com/qualcomm-6g-2028-3600781/
https://www.nokia.com/6g/6g-explained/
ITU-R WP5D IMT 2030 Submission & Evaluation Guidelines vs 6G specs in 3GPP Release 20 & 21
ITU-R WP 5D reports on: IMT-2030 (“6G”) Minimum Technology Performance Requirements; Evaluation Criteria & Methodology
ITU-R: IMT-2030 (6G) Backgrounder and Envisioned Capabilities
Ericsson and e& (UAE) sign MoU for 6G collaboration vs ITU-R IMT-2030 framework
Highlights of 3GPP Stage 1 Workshop on IMT 2030 (6G) Use Cases
6th Digital China Summit: China to expand its 5G network; 6G R&D via the IMT-2030 (6G) Promotion Group
MediaTek overtakes Qualcomm in 5G smartphone chip market
Lumen: “We’re Building the Backbone for the AI Economy” – NaaS platform to be available to more customers
“Lumen is determined to lead the transformation of our industry to meet the demands of the AI economy,” said Lumen Technologies CEO Kate Johnson. “With ubiquitous reach and a digital-first platform, we are positioned to deliver next-gen connectivity, power enterprise innovation, and secure our own growth. This is how we build the trusted network for AI and deliver exceptional value to our customers and shareholders.”
Highlights included keynote remarks from Johnson, who outlined the three pillars of the company’s strategy:
- Building the backbone for the AI economy with a physical network designed for scale, speed, and security – delivering connectivity anywhere and for everything customers want to do.
- Cloudifying and agentifying telecom to reduce complexity and simplify the network for customers as an intelligent, on-demand, consumption-based digital platform.
- Creating a connected ecosystem with partnerships that extend Lumen’s reach, accelerate customer-first, AI-driven innovation, and unlock new opportunities across industries.
Johnson noted how Lumen’s growth is powered by a set of unique enablers that turn the company’s network into a true digital platform. With near-term product launches like self-service digital portal Lumen Connect, a universal Fabric Port, and new innovations in development that extend intelligence into the network edge, Lumen is making connectivity programmable and effortless. Combined with the company’s Network-as-a-Service business model and a connected ecosystem of data centers, hyper-scalers and technology partners, these enablers give customers the speed, security, and simplicity they need to thrive in the AI economy.
Lumen Technologies CEO Kate Johnson spotlights the company’s bold strategy, financial progress, and early look at product roadmap to reimagine digital networking for the AI economy at a gathering of industry analysts.
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Chief Financial Officer Chris Stansbury said 2026 is expected to mark an inflection point as new digital revenues, growth in IP and Wavelengths, and long-term hyper-scaler contracts begin to outpace legacy declines – setting up what he called a “trampoline moment” for expansion. Lumen projects business segment revenue growth in 2028 and a return to overall top-line growth in 2029, establishing a clear path from stabilization to value creation.
With a strengthened balance sheet and greater financial freedom, executives highlighted the bold investment in the company’s three strategic pillars, each designed to accelerate innovation and position Lumen for long-term industry leadership.
Lumen’s strategy begins with the physical network, which carries a significant portion of the world’s internet traffic. With construction underway coast-to-coast, the company is executing a multi-billion-dollar program to expand its intercity and metro fiber backbone:
- Adding 34 million new fiber miles by the end of 2028 for a total of 47 million intercity and metro miles.
- Connecting data centers, clouds, edge, and enterprise locations in any combination.
- Delivering 400G today and plans to scale to 1.6 terabits in the future.
Lumen’s substantial investments to expand high-speed connectivity ensures customers have the network scale, speed, and reliability to confidently innovate and grow without constraints.
The rise of AI is driving unprecedented demands for a new, Cloud 2.0 architecture with distributed, low-latency, high-bandwidth networks that can move and process massive amounts of data across multi-cloud, edge, and enterprise locations. Lumen is meeting this challenge by cloudifying and agentifying telecom, turning its expansive fiber footprint into a programmable digital platform that strips away the complexity of legacy networking.
Lumen plans to make its network-as-a-service (NaaS) platform [1.] available to more customers, regardless of their existing internet connection. At the company’s Analyst Forum, The NaaS platform includes new innovations like Lumen Fabric Port (Q4 2025), Lumen Multi-Cloud Gateway (Q4 2025), and Lumen Connect (Q1 2026). Together, these technologies digitize the entire service lifecycle, so customers can provision, manage, and scale thousands of services across thousands of locations, within minutes.
Note 1. Network as a Service (NaaS) is a cloud-based model that allows businesses to rent networking services from a provider on a subscription or pay-per-use basis, instead of building and maintaining their own network infrastructure. NaaS provides scalable and flexible network capabilities, shifting the cost from a capital expense (CapEx) to an operational expense (OpEx). NaaS functions by using a virtualized, software-defined network, meaning the network capabilities are abstracted from the physical hardware. Businesses access and manage their network resources through a web-based interface or portal, and the NaaS provider manages the underlying infrastructure, including hardware, software, updates, and troubleshooting.
Lumen CTO Dave Ward unveiled “Project Berkeley,” a network interface device that essentially expands the company’s NaaS services, like on-demand internet, Ethernet and IP VPN, to off-net sites using any access type. Those access types can be 5G, fiber, copper, fixed wireless access, satellite and more. Project Berkeley leverages digital twin technology, which lets Lumen have “a full replicate understanding of exactly what’s going on in this device running out of our cloud.”
Ward said on the company’s website:
“Lumen is taking the network out of its hardware box and transforming it into a true digital platform. Technology and Product Officer Dave Ward. “By cloudifying our fiber assets into software and disrupting cloud economics, we’re giving customers the ability to turn up services within minutes, scale as their AI workloads demand, and innovate at cloud speed. This is what the future of digital networking should deliver.”
Lumen has been growing its NaaS platform for some time. It launched its first offering in 2023 and now counts over 1,000 enterprise NaaS customers. The company now plans to bring its connectivity products to over 10 million off-net buildings, said Ward. The device will also allow hyper-scalers to integrate and sell these products in their respective marketplaces.
In closing the Analyst session, CEO Johnson underscored that Lumen’s strategies are the foundation of the company’s momentum today – transforming the industry with innovation to fuel growth, strengthening financial performance, and positioning the company as a critical enabler in the digital economy.
“We’re thrilled by the energy and engagement we’ve seen from the analyst community. The discussions around how Lumen is delivering an expansive network, digital platform, connected ecosystem and winning culture to meet the exponential enterprise demands of AI demonstrate the urgent need for innovation in our industry, and we’re proud to be at the forefront of that conversation.”
About Lumen Technologies:
Lumen is unleashing the world’s digital potential. We ignite business growth by connecting people, data, and applications – quickly, securely, and effortlessly. As the trusted network for AI, Lumen uses the scale of our network to help companies realize AI’s full potential. From metro connectivity to long-haul data transport to our edge cloud, security, managed service, and digital platform capabilities, we meet our customers’ needs today and as they build for tomorrow.
For news and insights visit news.lumen.com, LinkedIn: /lumentechnologies, X: lumentechco, Facebook: /lumentechnologies, Instagram: @lumentechnologies and YouTube: /lumentechnologies. Lumen and Lumen Technologies are registered trademarks of Lumen Technologies LLC in the United States. Lumen Technologies LLC is a wholly owned affiliate of Lumen Technologies, Inc.
References:
For a replay of the webcast, visit Lumen’s investor website
https://www.fierce-network.com/broadband/lumen-says-its-taking-its-naas-new-level
Lumen deploys 400G on a routed optical network to meet AI & cloud bandwidth demands
Dell’Oro: Bright Future for Campus Network As A Service (NaaS) and Public Cloud Managed LAN
NaaS emerges as challenger to legacy network models; likely to grow rapidly along with SD WAN market
Verizon and WiPro in Network-as-a-Service (NaaS) partnership
ABI Research: Network-as-a-Service market to be over $150 billion by 2030
Cisco Plus: Network as a Service includes computing and storage too
Gartner: changes in WAN requirements, SD-WAN/SASE assumptions and magic quadrant for network services
Ciena to acquire Nubis Communications for high performance optical and electrical interconnects to support AI workloads
New Ciena Acquisition:
Today, Ciena announced it will acquire electronics startup Nubis Communications, a privately-held company headquartered in New Providence, New Jersey for $270 million. Nubis specializes in high-performance, ultra-compact, low-power optical and electrical interconnects tailored to support AI workloads. The Nubis acquisition will give Ciena access to technology that supports a wider range of data center use cases. It is is expected to close during Ciena’s fiscal 4th quarter.
Nubis’ solutions complement Ciena’s existing high-speed interconnects portfolio and will enable new capabilities to support growing AI workloads by significantly increasing scale up and scale out capacity and density inside the data center. The Nubis portfolio includes two key technologies:
- Co-Packaged Optics (CPO) / Near Packaged Optics (NPO): Nubis’ compact, high-density optical modules deliver ultra-fast data transfer using light instead of traditional electrical signals. Supporting up to 6.4 Tb/s full-duplex bandwidth, these modules are optimized for low-latency, low-power operation – making them ideal for scaling AI systems. Combined with Ciena’s high-speed SerDes, Nubis’ optical engines enable differentiated CPO solutions to address high-performance connectivity needs inside and between racks.
- Electrical ACC: Nubis’ advanced analog electronics enable Active Copper Cables (ACC) to support high-speed data transmission, allowing data to travel up to 4 meters at speeds of 200 Gb/s per lane. This low-power, low-latency solution helps customers connect more AI accelerators across racks without the limitations of traditional copper or DSP-based solutions
Nubis has developed two products to increase bandwidth and reduce latency within and between data center racks:
- XT Optical Engines is a series of optical modules that support up to 6.4 Tbps of full-duplex bandwidth while using light instead of traditional electrical signals.
- Nitro Linear Redriver aims to improve the performance of all the copper cables that are wired into the data center. Bloomberg has predicted copper usage in North American data centers could increase by 1.1-2.4 million tons by 2030 as “AI demands mount.”
“The acquisition of Nubis represents a significant step forward in Ciena’s strategy to address the rapidly growing demand for scalable, high-performance connectivity inside the data center, driven by the explosive growth of AI-related traffic,” said David Rothenstein, Chief Strategy Officer at Ciena. “With ownership of these key technologies for a wider range of use cases inside the data center, we are expanding our competitive advantage by advancing development of differentiated solutions, reducing development costs, and driving long-term efficiency and profitability. Nitro also supports up to 4m of reach for 200G per lane active copper cables, far beyond the limits of passive copper and legacy analog solutions. This is a game-changer for AI infrastructure, where short-reach, high-bandwidth copper is preferred for cost and latency reasons,” Rothenstein added.
“The Nubis team is thrilled to join Ciena and enhance its industry-leading portfolio with our breakthrough interconnect technologies,” said Dan Harding, CEO of Nubis. “Together, we will advance Ciena’s data center strategy by delivering reliable, high-quality, and high-performance interconnect solutions to support the next generation of AI workloads.”
Dell’Oro VP Jimmy Yu said Nubis is probably “one of [Ciena’s] most forward-looking” acquisitions, since the company is assembling the pieces it thinks are necessary to support future data center networking. “This acquisition aligns well with Ciena’s overall strategy to expand into the data center market, and it likely played a role in their decision to exit future investments in broadband PON,” Yu said.
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Ciena Cutting Back on Residential Broadband Access investments to focus on AI and Coherent Optics:
The Nubis takeover comes shortly after Ciena announced it will reduce investment in residential broadband access (e.g. 25G PON) to focus more on AI applications and its coherent optics business. Ciena CEO Gary Smith said on the company’s Q3 2025 earnings call:
“Folks are more concentrated on 10-gig and driving that out, and there’s a good market for that. As we looked at our overall portfolio and our investments in [25-gig], we see so much opportunity in these different AI workloads that we want to continue to really make sure we’re heavily invested in that….To be clear, we will continue to sell and support our existing broadband access products. However, we will be limiting our forward investments only to strategic areas such as DCOM [1.].”
Note 1. DCOM refers to Ciena’s data center out-of-band management solution, which involves replacing bulky legacy hardware like copper cabling and console servers with passive optical network (PON) technology.
Dell’Oro Group’s Jimmy Yu thinks Ciena’s move to re-allocate R&D dollars makes sense so that the company is not spread too thin and [misses] out the biggest opportunity sitting in front of them. “My guess is that to address the future of AI workloads and AI data center interconnect, Ciena will need to not only maintain their cadence on launching new high performance coherent optics like the WaveLogic 6e for long distance 1.6 Tbps connections, but also optical devices for shorter distances like 800 ZR/ZR+ plugs and even shorter distances that take them inside the data center,” Yu explained.
Ciena considers the WaveLogic series its bread-and-butter for coherent optics. The company in Q3 gained 11 new customers for its WaveLogic 6 Extreme product, bringing its total customer tally to 60. Companies deploying WaveLogic 6 include operators such as Arelion, Lumen and Telstra, which are upgrading their networks to support demand from cloud customers.
Supplemental Materials:
In conjunction with this announcement, Ciena has posted to the Events and Presentations page of the Investor Relations section of its website a recorded transaction overview presentation and accompanying transcript.
About Ciena:
Ciena is the global leader in high-speed connectivity. We build the world’s most adaptive networks to support exponential growth in bandwidth demand. By harnessing the power of our networking systems, components, automation software, and services, Ciena revolutionizes data transmission and network management. With unparalleled expertise and innovation, we empower our customers, partners, and communities to thrive in the AI era. For updates on Ciena, follow us on LinkedIn and X, or visit the Ciena Insights webpage and Ciena website.
About Nubis Communications:
Nubis says they innovate across photonics, electronics, packaging and manufacturing to create optics significantly more dense, scalable and lower power than existing solutions, breaking the I/O wall in data centers and enabling more advanced compute, AI and machine learning. The startup has raised over $50 million in funding with the help of investors such as Ericsson and Marvell Technology co-founders Weili Dai and Sehat Sutardja.
Nubis has just over 50 employees including a seasoned executive team. Founder Peter Winzer previously led fiber optic transmission research at Nokia’s Bell Labs, while CEO Dan Harding spent over 15 years at Broadcom.
References:
https://www.nubis-inc.com/about-us/
https://www.nubis-inc.com/products/
https://www.fierce-network.com/broadband/ciena-ramps-data-center-focus-new-270m-deal
https://www.fierce-network.com/broadband/ciena-pulls-back-broadband-focus-more-ai
AI infrastructure investments drive demand for Ciena’s products including 800G coherent optics
Lumen and Ciena Transmit 1.2 Tbps Wavelength Service Across 3,050 Kilometers
Ciena CEO sees huge increase in AI generated network traffic growth while others expect a slowdown
Summit Broadband deploys 400G using Ciena’s WaveLogic 5 Extreme
DriveNets and Ciena Complete Joint Testing of 400G ZR/ZR+ optics for Network Cloud Platform
Ciena acquires 2 privately held companies: Tibit Communications and Benu Networks
T-Mobile’s new CEO Srini Gopalan faces fierce competition from AT&T, Verizon and MVNOs
Today, T-Mobile US promoted Srini Gopalan, from chief operating officer (COO) to CEO. Gopalan is a veteran of parent company Deutsche Telekom as the head of its German home market. He has also held executive roles at Indian telecom company Bharti Airtel, Capital One and Vodafone.
Current CEO Mike Sievert will move into a newly created vice-chairman position. He said in a WSJ interview that he would continue to influence the company’s strategy. “I recruited Srini starting about a year ago with the idea that this day would come,” Sievert said.
T-Mobile has often been recognized for its high-speed 5G network and standalone 5G network capabilities. The “un-carrier” capitalized on the Sprint merger (announced in April 19, 2018; finalized April 1, 2020) to grow its customer base, winning share in both postpaid and prepaid markets and positioning itself as the industry’s fastest-growing carrier. Under Sievert’s tenure, T-Mobile drew millions of broadband customers from cable industry-dominated markets by using its 5G network to beam internet service into homes and businesses. The company is also exploring the wired-broadband business, including through a roughly $5 billion investment in a joint venture with investment company KKR.
Wireless carriers have been grappling with slowing subscriber growth, rising competition and increasingly cautious consumers unwilling to pay for premium plans. T-Mobile’s strongest competitors have been the other two major nationwide mobile carriers Verizon and AT&T. However, the growing market for Mobile Virtual Network Operators (MVNOs), especially from cablecos like Comcast and Charter, has also introduced a new, significant competitive challenge.
Yet both Gopalan and Sievert said the business can keep up the pace as the mobile-phone market matures. “We really like wireless as a neighborhood in the U.S., and we have clearly outperformed everyone else,” Gopalan said in an interview, adding that T-Mobile’s home broadband business has more room to grow. “We’ve shown our hand in fiber. We like pure-play fiber, we like the idea of scaling that business, got two acquisitions already and we’re looking at what other value-creator deals are there.”
Gopalan “brings a wealth of experience a
nd is a very impressive leader, and they’ve handled this transition exceptionally well. I don’t expect there to be any fall-off at all in T-Mobile’s performance,” MoffettNathanson analyst Craig Moffett said.
Craig wrote in a research note that a new wholesale deals with Comcast and Charter could give those cable operators an even stronger price edge in business wireless — a market where T-Mobile has been clawing share. “Cable wins. And T-Mobile wins as well,” Moffett wrote, while raising questions about whether the tie-up could lead to deeper partnerships that would reshape the sector. He added that, while T-Mobile is well-positioned in consumer wireless, cable’s entry into enterprise could spark new price wars, making execution under new leadership even more critical.C
T-Mobile has made several acquisitions since it acquired Sprint in 2020. It spent $1.35 billion to acquire Ryan Reynolds’s Mint Mobile in May 2024, giving the company access to more value-conscious phone plan shoppers.
The company has also closed deals for fiber-optic plays Metronet ($4.9 billion), US Cellular ($4.4 billion), and Lumos ($950 million).
References:
https://www.wsj.com/business/telecom/t-mobile-names-telecom-veteran-as-next-ceo-abb4194b
T-Mobile’s growth trajectory increases: 5G FWA, Metronet acquisition and MVNO deals with Charter & Comcast
Evercore: T-Mobile’s fiber business to boost revenue and achieve 40% penetration rate after 2 years
WSJ: T-Mobile hacked by cyber-espionage group linked to Chinese Intelligence agency
T-Mobile posts impressive wireless growth stats in 2Q-2024; fiber optic network acquisition binge to complement its FWA business
T-Mobile to acquire UScellular’s wireless operations in $4.4 billion deal
T-Mobile & EQT Joint Venture (JV) to acquire Lumos and build out T-Mobile Fiber footprint
AI Data Center Boom Carries Huge Default and Demand Risks
“How does the digital economy exist?” asked John Medina, a senior vice president at Moody’s, who specializes in assessing infrastructure investments. “It exists on data centers.”
New investments in data centers to power Artificial Intelligence (AI) are projected to reach $3 trillion to $4 trillion by 2030, according to Nvidia. Other estimates suggest the investment needed to keep pace with AI demand could be as high as $7 trillion by 2030, according to McKinsey. This massive spending is already having a significant economic impact, with some analysis indicating that AI data center expenditure has surpassed the total impact from US consumer spending on GDP growth in 2025.
U.S. data center demand, driven largely by A.I., could triple by 2030, according to McKinsey. That would require data centers to make nearly $7 trillion in investment to keep up. OpenAI, SoftBank and Oracle recently announced a pact to invest $500 billion in A.I. infrastructure through 2029. Meta and Alphabet are also investing billions. Merely saying “please” and “thank you” to a chatbot eats up tens of millions of dollars in processing power, according to OpenAI’s chief executive, Sam Altman.
- OpenAI, SoftBank, and Oracle pledging to invest $500 billion in AI infrastructure through 2029.
- Nvidia and Intel collaborating to develop AI infrastructure, with Nvidia investing $5 billion in Intel stock.
- Microsoft spending $4 billion on a second data center in Wisconsin.
- Amazon planning to invest $20 billion in Pennsylvania for AI infrastructure.
Compute and Storage Servers within an AI Data Center. Photo credit: iStock quantic69
The spending frenzy comes with a big default risk. According to Moody’s, structured finance has become a popular way to pay for new data center projects, with more than $9 billion of issuance in the commercial mortgage-backed security and asset-backed security markets during the first four months of 2025. Meta, for example, tapped the bond manager Pimco to issue $26 billion in bonds to finance its data center expansion plans.
As more debt enters these data center build-out transactions, analysts and lenders are putting more emphasis on lease terms for third-party developers. “Does the debt get paid off in that lease term, or does the tenant’s lease need to be renewed?” Medina of Moody’s said. “What we’re seeing often is there is lease renewal risk, because who knows what the markets or what the world will even be like from a technology perspective at that time.”
Even if A.I. proliferates, demand for processing power may not. Chinese technology company DeepSeek has demonstrated that A.I. models can produce reliable outputs with less computing power. As A.I. companies make their models more efficient, data center demand could drop, making it much harder to turn investments in A.I. infrastructure into profit. After Microsoft backed out of a $1 billion data center investment in March, UBS wrote that the company, which has lease obligations of roughly $175 billion, most likely overcommitted.
Some worry costs will always be too high for profits. In a blog post on his company’s website, Harris Kupperman, a self-described boomer investor and the founder of the hedge fund Praetorian Capital, laid out his bearish case on A.I. infrastructure. Because the building needs upkeep and the chips and other technology will continually evolve, he argued that data centers will depreciate faster than they can generate revenue.
“Even worse, since losing the A.I. race is potentially existential, all future cash flow, for years into the future, may also have to be funneled into data centers with fabulously negative returns on capital,” he added. “However, lighting hundreds of billions on fire may seem preferable than losing out to a competitor, despite not even knowing what the prize ultimately is.”
It’s not just Silicon Valley with skin in the game. State budgets are being upended by tax incentives given to developers of A.I. data centers. According to Good Jobs First, a nonprofit that promotes corporate and government accountability in economic development, at least 10 states so far have lost more than $100 million per year in tax revenue to data centers. But the true monetary impact may never be truly known: Over one-third of states that offer tax incentives for data centers do not disclose aggregate revenue loss.
Local governments are also heralding the expansion of energy infrastructure to support the surge of data centers. Phoenix, for example, is expected to grow its data center power capacity by over 500 percent in the coming years — enough power to support over 4.3 million households. Virginia, which has more than 50 new data centers in the works, has contracted the state’s largest utility company, Dominion, to build 40 gigawatts of additional capacity to meet demand — triple the size of the current grid.
The stakes extend beyond finance. The big bump in data center activity has been linked to distorted residential power readings across the country. And according to the International Energy Agency, a 100-megawatt data center, which uses water to cool servers, consumes roughly two million liters of water per day, equivalent to 6,500 households. This puts strain on water supply for nearby residential communities, a majority of which, according to Bloomberg News, are already facing high levels of water stress.
“I think we’re in that era right now with A.I. models where it’s just who can make the bigger and better one,” said Vijay Gadepally, a senior scientist at the Lincoln Laboratory Supercomputing Center at the Massachusetts Institute of Technology. “But we haven’t actually stopped to think about, Well, OK, is this actually worth it?”
References:
What Wall Street Sees in the Data Center Boom – The New York Times
Will billions of dollars big tech is spending on Gen AI data centers produce a decent ROI?
Gartner: AI spending >$2 trillion in 2026 driven by hyperscalers data center investments
Analysis: Cisco, HPE/Juniper, and Nvidia network equipment for AI data centers
Cisco CEO sees great potential in AI data center connectivity, silicon, optics, and optical systems
Networking chips and modules for AI data centers: Infiniband, Ultra Ethernet, Optical Connections
Superclusters of Nvidia GPU/AI chips combined with end-to-end network platforms to create next generation data centers
Lumen Technologies to connect Prometheus Hyperscale’s energy efficient AI data centers
Gartner: AI spending >$2 trillion in 2026 driven by hyperscalers data center investments
According to Gartner, global AI spending will reach close to US$1.5 trillion this year and will top $2 trillion in 2026 as ongoing demand fuel IT infrastructure investment. This significant growth is driven by hyperscalers’ ongoing investments in AI-optimized data centers and hardware, such as GPUs, along with increased enterprise adoption and the integration of AI into consumer devices like smartphones and PCs.
| Market | 2024 | 2025 | 2026 |
| AI Services | 259,477 | 282,556 | 324,669 |
| AI Application Software | 83,679 | 172,029 | 269,703 |
| AI Infrastructure Software | 56,904 | 126,177 | 229,825 |
| GenAI Models | 5,719 | 14,200 | 25,766 |
| AI-optimized Servers (GPU and Non-GPU AI Accelerators) | 140,107 | 267,534 | 329,528 |
| AI-optimized IaaS | 7,447 | 18,325 | 37,507 |
| AI Processing Semiconductors | 138,813 | 209,192 | 267,934 |
| AI PCs by ARM and x86 | 51,023 | 90,432 | 144,413 |
| GenAI Smartphones | 244,735 | 298,189 | 393,297 |
| Total AI Spending | 987,904 | 1,478,634 | 2,022,642 |
Source: Gartner (September 2025)
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Hyperscaler Investments:
Cloud service providers are heavily investing in data centers and AI-optimized hardware to expand their services at scale. Amazon, Google and Microsoft are all ploughing massive sums into their cloud infrastructure, while reaping the benefits of AI-driven market growth, as Canalys’s latest data showed last week.
Businesses are increasingly investing in AI infrastructure and services, though there’s a shift towards using commercial off-the-shelf solutions with embedded GenAI features rather than solely developing custom solutions.
A growing number of consumer products, including smartphones and PCs, are incorporating AI capabilities by default, contributing to the overall spending growth. IDC forecasts GenAI smartphones* to reach 54% of the market by 2028, while Gartner projects nearly 100% of premium models to feature GenAI by 2029, driving significant increases in both shipments and end-user spending.
* A GenAI smartphone is a a mobile device featuring a system-on-a-chip (SoC) with a powerful Neural Processing Unit (NPU) capable of running advanced Generative Artificial Intelligence (GenAI) models directly on the device. It enables features like content creation, personalized assistants, and real-time task processing without needing constant cloud connectivity. These phones are designed to execute complex AI tasks faster, more efficiently, and with enhanced privacy compared to standard smartphones that rely heavily on the internet for such functions.
AI hardware, particularly GPUs and other AI accelerators, accounts for a substantial portion of the growth, with hyperscaler spending on these components nearly doubling, according to a story at CIO Drive.
About Gartner AI Use Case Insights:
Gartner AI Use Case Insights is an interactive tool that helps technology and business leaders efficiently discover, evaluate, and prioritize AI use cases to potentially pursue. Clients can search over 500 use cases (applications of AI in specific industries) and over 380 case studies (real world examples) based on industry, business function, and Gartner’s assessment of potential business value.
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AI spending is surging; companies accelerate AI adoption, but job cuts loom large
Will billions of dollars big tech is spending on Gen AI data centers produce a decent ROI?
Canalys & Gartner: AI investments drive growth in cloud infrastructure spending
AI Echo Chamber: “Upstream AI” companies huge spending fuels profit growth for “Downstream AI” firms
AI wave stimulates big tech spending and strong profits, but for how long?
Deutsche Telekom selects Iridium for NB-IoT direct-to-device (D2D) connectivity
Low Earth orbit (LEO) satellite operator Iridium Communications Inc announced a new partnership with Deutsche Telekom to deliver global connectivity to their customers through the Iridium NTN DirectSM service. Deutsche Telekom will gain roaming access to Iridium’s forthcoming 3GPP 5G NTN specification-based service, providing NB-IoT direct-to-device (D2D) connectivity that will keep customers, and their assets, connected from pole to pole. The two companies will be collaborating to integrate Iridium NTN Direct with Deutsche Telekom’s terrestrial global IoT network.
Deutsche Telekom is among the first mobile network operators to begin integrating Iridium NTN Direct with terrestrial infrastructure, positioning it at the forefront of standards-based IoT innovation in areas beyond the reach of traditional mobile networks and competing satellite networks. The launch of NTN Direct was made possible by Project Stardust. Launched in early 2024, it has enabled Iridium to upgrade its existing L-band LEO network to support narrowband non-terrestrial-networking (NB-NTN).
“Iridium NTN Direct is designed to complement terrestrial networks like Deutsche Telekom and provide seamless global coverage, extending the reach of their own infrastructure,” said Matt Desch, CEO, Iridium. “This partnership underscores the power of creating a straightforward, scalable solution that builds on existing technology to enable global service expansion.”
“We look forward to integrating Iridium as our next non-terrestrial roaming partner for IoT connectivity. By providing our customers with access to Iridium’s extensive LEO satellite network, they will benefit from broadened global NB-IoT coverage to reliably connect sensors, machines and vehicles,” said Jens Olejak, Head of Satellite IoT, Deutsche Telekom. “This convergence is now possible through affordable, 3GPP-standardized 5G devices that function across both terrestrial and non-terrestrial networks.”
Planned for commercial launch in 2026, the service will allow Deutsche Telekom’s IoT customers to roam onto the Iridium network to support use cases such as messaging, tracking, and status updates for IoT, automotive, and industrial devices, with applications spanning international cargo logistics, remote utility monitoring, smart agriculture, and emergency response.
The Iridium constellation is the only network delivering truly global coverage using L-band spectrum, providing reliable connectivity through both routine and extreme weather events, like hurricanes and blizzards. Its LEO orbit provides superior coverage, look angles and lower latency compared to geostationary systems. Upon successful integration and testing, Iridium and Deutsche Telekom plan to execute a roaming agreement to support full commercial service launch.
https://www.iridium.com/ntn-direct/
About Iridium Communications Inc:
Iridium® is the only mobile voice, data, and PNT satellite network that spans the entire globe. Iridium enables connections between people, organizations, and assets to and from anywhere, in real time. Together with its ecosystem of partner companies, Iridium delivers an innovative and rich portfolio of reliable solutions for markets that require truly global communications. In 2024, Iridium acquired Satelles and its positioning, navigation, and timing (PNT) service. Iridium Communications Inc. is headquartered in McLean, Va., U.S.A., and its common stock trades on the Nasdaq Global Select Market under the ticker symbol IRDM. For more information about Iridium products, services, and partner solutions, visit www.iridium.com.
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Activity at other LEO Operators:
- SpaceX/Starlink agreed to acquire AWS-4 and H-block spectrum from EchoStar for 17 billion last week. The frequencies will be used to strengthen the company’s direct-to-cell (D2C) business.
- Globalstar, has ratcheted up its ambitions by initiating a plan to bolster its upcoming C-3 network through the addition of another complementary constellation called HIBLEO-XL-1. Details are scant, but a Space Intel report from May 2022 revealed that Globalstar had registered with regulators in Europe its intention to launch 3,080 satellites at altitudes of between 485-700 km.
- SES has struck a deal with space technology specialist to K2 Space to develop a new generation of medium Earth orbit (MEO) satellites. An on-orbit mission is planned for Q1 2026. SES has also partnered with France-based laser specialist Cailabs to test optical ground stations that use lasers to transmit and receive data from space.
- “Our future MEO network will evolve through agile innovation cycles,” said SES CEO Adel Al-Saleh. “By collaborating with K2 Space and other trusted innovative partners, we’re combining our solutions development experience and operational depth with NewSpace agility to develop a flexible, software-defined network that adapts to customer requirements.”
References:
Huge significance of EchoStar’s AWS-4 spectrum sale to SpaceX
Qualcomm and Iridium launch Snapdragon Satellite for 2-Way Messaging on Android Premium Smartphones
Iridium Introduces its NexGen Satellite IoT Data Service
Satellite 2024 conference: Are Satellite and Cellular Worlds Converging or Colliding?
SatCom market services, ITU-R WP 4B, 3GPP Release 18 and ABI Research Market Forecasts
Economic Times: Qualcomm, MediaTek developing chipsets for Satcom services
ABI Research and CCS Insight: Strong growth for satellite to mobile device connectivity (messaging and broadband internet access)
Qualcomm announces 4 new SoC’s for IoT applications and use cases
FCC proposes regulatory framework for space-mobile network operator collaboration
