AI infrastructure shortages could drive efficiency as Wood sees labor shortages ahead

Shortages of power, chips and data centers could improve the efficiency of AI investment and help sustain the technology’s expansion. The outlook also points to labor shortages rather than mass unemployment.

In an ARK Invest broadcast on November 7, CEO Cathie Wood said constraints on AI infrastructure were pushing companies to improve efficiency early in the technology’s development. She argued that this could support a healthier, longer-lasting expansion than the technology and telecom boom.

Wood said large flows of capital into new technologies typically generate substantial waste. Power and chip shortages, potentially compounded by tighter data center supply, were instead forcing companies to use resources more efficiently. She suggested that this could reduce the fallout compared with the internet bubble and its collapse.

Community opposition to data center construction remains an issue companies need to address, Wood said. Developers had assumed that well-paid jobs and higher tax revenue would win local support, while paying insufficient attention to local politics and residents’ concerns. She cited rising electricity bills, pollution concerns surrounding generators, the appearance of facilities and potential displacement as issues requiring changes in how projects are developed.

Wood also argued that data centers’ local economic benefits deserved consideration. Citing a discussion participant who lives in Virginia, she described lower property taxes and an influx of businesses, jobs and taxpayers that had supported new schools, parks and aquatic facilities. She said coverage focused on negative effects could obscure those benefits.

Wood rejected expectations that AI would cause mass unemployment. She said warnings about human extinction and widespread job losses had helped shape negative perceptions of the technology, adding: “We think we’re going to be facing a labor shortage.”

She described data centers as the physical expression of a technological transformation she considers larger than the industrial revolution. Addressing residents’ concerns and explaining the economic benefits would be necessary, she said, while efficiency gains prompted by supply constraints could help make the expansion more durable.