Kevin O'Leary's data center company pushes back on the 'bragawatt' label

Kevin O'Leary's data center company pushes back on the 'bragawatt' label Kevin O'Leary's data center company has a message for analysts who doubt its enormous AI ambitions: You're not seeing the whole picture.Paul Palandjian, CEO of O'Leary Digital, pushed back on a Bernstein Research assessment that put the firm near the bottom of the data center industry's credibility rankings. In an emailed response to Business Insider, he detailed land agreements, water applications and licensing, engineering work, and funding that he said the analysis overlooks."Scrutiny during this cycle is fair," Palandjian wrote. He added, "A score built from announced-capacity data ranks every pre-construction project low on construction progress by definition, and it cannot see confidential work."His response gets at a central question in the AI building boom: How much weight should investors give the work that happens before data center construction begins? Paul Palandjian, CEO of O'Leary Digital. Paul Palandjian/O'Leary Digital Bernstein examined thousands of data center projects using data from the tracking firm Aterio, assessing factors such as construction progress, electricity availability, and industry experience. Its analysis concluded that only about 35% of announced data center capacity in the US will get built.O'Leary Digital received a credibility score of 0.35 out of 5. Bernstein estimated that 489 megawatts of its announced 15-gigawatt pipeline would materialize, roughly 3%. The analysts grouped it with ambitious newcomers described as "bragawatts."Palandjian said the 15-gigawatt figure represents the full build-out of two campuses in Utah and Alberta over several years."We would rather be judged on milestones than on a model," he wrote.Data center power without the queuePalandjian's clearest distinction concerns electricity, one of the biggest obstacles facing data center developers. "We are not in an interconnection queue," he wrote, referring to the waiting lists for connections to the electricity grid.Instead, both campuses are designed to generate all their electricity on-site, he said, with direct access to natural gas pipelines and supplies. That's what the industry calls "behind the meter": producing power at the facility rather than relying on an electricity utility to supply it from the grid.Data center land, water, and early moneyIn Utah, Palandjian said the Military Installation Development Authority had approved and executed a 30-year development agreement naming O'Leary Digital as master developer of the project area.About 11,000 acres are under binding agreements, he said. Master planning, ground studies, and laser-based land surveying have finished at both sites, and the company filed an engineered Utah water application in late September, he added.In Alberta, about 13,000 acres are under a binding agreement, and a water license for 6 million cubic meters a year has been granted, Palandjian said. He also said that both sites are away from densely populated residential communities.On money, Palandjian said his firm has capital for both pre-development and advancing the project toward key milestones. He did not specify a funding amount or say the entire build-out was financed.He said that the engineering, power, and construction firms working with the company, and the global banks advising it, provide evidence of its ability to deliver."With that team, every critical part of the project is being worked through, gaps are identified early, and we are closing them to raise our probability of success," he wrote.Palandjian said that while O'Leary Digital is young, its team has decades of experience in real estate, power, and infrastructure.Bernstein's skepticism does not mean every newcomer will fail."It's not that all of these guys are sort of terrible and not going to deliver, but we just have lower confidence because we don't know them," analyst Madison Rezaei said.With Palandjian's update, now we know a bit more.Sign up for the AI Insider newsletter here. Reach out to me via email at abarr@businessinsider.com Read next Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Alistair Barr is the driving force behind Business Insider's AI Insider franchise, including the AI Insider newsletter. Sign up here. Before that, he was Business Insider's Global Tech Editor and the Big Tech team leader at Bloomberg, following a reporting career at The Wall Street Journal, USA Today, Reuters, and MarketWatch. Alistair covers all things Big Tech, along with startups and venture capital. He writes analysis and columns about topics including AI, cloud computing, data centers, semiconductors, online search, e-commerce, EVs, robotics, and autonomous vehicles. Artificial Intelligence Data Centers AI Insider More Energy Infrastructure