As the AI investment boom keeps inflating U.S. data center construction plans, Wall Street is taking a fresh look at how much of this massive expansion blueprint can actually be delivered. In a research note released on November 10, Bernstein pointed out that the total scale of North American data center projects under development that it tracks has reached 586 gigawatts (GW).

After a comprehensive assessment of construction progress, customer quality, developer strength and regulatory risk, however, the firm believes only about 199 GW carries relatively high credibility for delivery, accounting for roughly 34%. This means about two-thirds of the planned capacity announced by the market cannot yet be treated as reliable future supply.

Bernstein stressed, however, that this does not mean the remaining projects will all be canceled. Instead, many remain in the early planning stage, with significant uncertainty around construction timing, financing capacity and eventual delivery scale.

Bernstein noted that although changes in the financing environment for AI cloud computing companies, political election outcomes and adjustments to big tech investment plans over the past few months have continued to affect market expectations, data center construction itself has a long cycle, typically requiring two to three years and even longer in regions with tight power supply. As a result, short-term market volatility will not immediately change the construction landscape of the entire industry.

Looking at the latest data, the scale of projects tracked by Bernstein rose from 411 GW in July to 488 GW in August and further to 586 GW in October. Over the same period, risk-adjusted credible construction capacity was 136 GW, 170 GW and 199 GW, corresponding to ratios of 33%, 35% and 34%. This shows that although planned data center scale continues to expand, the share of projects with relatively high construction certainty has consistently remained around one-third.

The most important factor creating this gap is the development stage of the projects. Bernstein data shows that about 497 GW of data center capacity is still in the announced planning stage, making up roughly 85% of all projects under development, but the probability-weighted credible capacity of this portion is only 123 GW, corresponding to construction credibility of about 25%.

By comparison, projects already under construction total about 87 GW, with credible capacity reaching 75 GW and construction credibility as high as 86%. In other words, although projects already under construction account for only a small part of total planned scale, they contribute about 38% of credible construction capacity. Bernstein believes actual construction progress reflects the likelihood of a project ultimately being delivered far better than corporate expansion announcements.

Beyond construction progress, customer credit quality is also an important factor determining whether projects can be realized. Data centers with long-term leasing commitments from large technology companies are generally easier to finance and push forward, while some projects converted from cryptocurrency mining businesses, projects by emerging AI cloud service providers and development plans lacking clear tenants face higher uncertainty.

By developer type, data center projects built by large cloud computing companies themselves have the highest credibility, at about 75%; professional data center colocation operators have credibility of about 62%. In contrast, projects by emerging AI cloud service providers have credibility of only about 29%, projects converted from cryptocurrency mining operations are about 24%, and other types of developers have even lower average credibility of only about 11%.

Bernstein pointed out that Amazon.com Inc (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG, NASDAQ: GOOGL), Microsoft Corp (NASDAQ: MSFT) and Meta Platforms Inc (NASDAQ: META) together contribute about 78 GW of credible construction capacity, accounting for about 39% of all credible projects. Among individual developers, Amazon leads with about 33 GW of credible capacity, followed by Google at about 20 GW, Meta at about 15 GW and Microsoft at about 10 GW.

This also means that although more and more emerging companies are announcing massive AI data center investment plans, the incremental capacity truly expected to be delivered remains highly concentrated in the hands of large technology companies and professional operators with strong financial strength, clear customer demand and mature construction experience.

It is worth noting that data center projects also face increasingly strict local regulation. Bernstein pointed out that several major U.S. states for data center construction are tightening restrictions on grid interconnection, energy cost sharing and project approval, with policy changes in Texas, Georgia and Ohio particularly noteworthy.

Texas is the largest data center planning market in the United States, with about 150 GW of capacity under development, but Bernstein believes only about 43 GW to 44 GW of that has relatively high credibility. Grid interconnection and approval restrictions in the state may delay projects that have not yet started construction, although about 21 GW of projects have already entered the construction phase and are relatively less affected by the new restrictions.

Bernstein believes tighter regulation is more likely to lead to project delays or higher construction costs rather than large-scale cancellations. In particular, projects that have already secured customer support, completed financing and entered the construction phase still have relatively solid overall delivery prospects.

In addition, some developers are trying to reduce reliance on the public grid by building their own power sources or directly pairing with power supply. Bernstein data shows that the planned capacity of such projects increased from 185 GW in August to 231 GW in October, but credible capacity rose only from 42 GW to 47 GW, accounting for about 20%. This indicates that although self-supplied power solutions are popular in the market, related projects still face major challenges in funding, power construction and actual execution.

On investment opportunities, Bernstein remains bullish on data center developers with mature operating experience and diversified project pipelines. The firm named Equinix Inc (NASDAQ: EQIX) and Digital Realty Trust Inc (NYSE: DLR) as top picks in the data center sector, both rated "Outperform," with price targets of $1,270 and $226, respectively.

In the industrial and electrical equipment areas related to data center construction, Bernstein is also bullish on Quanta Services Inc (NYSE: PWR), Eaton Corp PLC (NYSE: ETN), Hubbell Inc (NYSE: HUBB), Forgent Power Solutions Inc (NYSE: FPS) and Legence Corp (NASDAQ: LGN), believing these companies are expected to benefit from long-term demand brought by data center construction and power infrastructure investment.

Overall, Bernstein believes the AI data center construction boom is still ongoing, but investors need to distinguish between planned capacity announced by companies and projects truly expected to enter operation. As financing capacity, customer credit and regulatory conditions gradually become key factors determining project progress, companies with actual construction experience, stable funding sources and a high-quality customer base will be more likely to stand out in this round of AI infrastructure expansion.