Catalyst with Shayle Kann: "Who Benefits from the AI Power Bottleneck?"

Podcast Host: Shayle Kann
Guest: Shanu Matthew, SVP & Portfolio Manager, US Sustainable Equity at Lazard
Release Date: December 4, 2025
Producer: Latitude Media

Episode Overview

This episode dives into the emerging narrative that power scarcity is the key limiting factor for continued growth in AI and data centers—and unpacks the nuanced incentives driving different industry players to amplify, downplay, or capitalize on this bottleneck. Shayle Kann and his guest, investor Shanu Matthew, systematically analyze incentives throughout the AI and energy ecosystem, revealing why almost everyone involved benefits by talking up the bottleneck, even as the reality and magnitude of the constraint may shift.

Key Discussion Points & Insights

1. Context: The AI-Power Scarcity Narrative

• Over the past year, mentions of "power" or "energy" have skyrocketed on S&P 500 earnings calls.
• Shayle (02:52): The prevailing narrative is that power is a bottleneck for data center and AI growth—both a real constraint and a "convenient scapegoat" for a variety of players.
• Incentives shape this narrative, affecting how companies communicate and invest.

Notable Quote

• Shayle (02:52): "There's basically no question in my mind that power is actually a bottleneck for data center growth today and perhaps therefore for AI growth. That's sort of a truism, but it could also become a comfortable scapegoat depending on where things trend in AI world."

2. Why Examine Incentives?

• Shanu (04:57): With so many conflicting narratives from earnings calls and press, it's crucial to analyze each actor's economic incentives to understand biased perspectives.
• Goal is not to accuse companies of misleading the market, but to clarify incentives informing their messaging.

Notable Quote

• Shanu (04:57): "Humans, organizations, have incentives and incentives drive behaviors, as everyone knows. And how could we take that lens and apply it to the power debate?"

3. Key Actor Groupings & Their Incentives

(07:35–08:41)

A. Hyperscalers (Cloud Giants: Amazon, Google, Microsoft, Meta)

• Strong incumbents; build or procure data center capacity.
• Incentive:
  • Play up power scarcity to mobilize the market to build more infrastructure, making it easier (and possibly cheaper) for them to expand.
  • "Optionality" is key—they can reserve capacity and walk away from deposits if projections change.
  • Keeping the narrative focused on power scarcity shifts attention away from demand-side risks.
• Nuance: Scarcity can also benefit them if they can corner scarce resources faster than "neo-clouds" and competitors.

Notable Quotes

• Shayle (11:29): "My incentive in that scenario would be to talk up power constraints, right? Saying that there's not nearly enough of it...that will incent speculators, developers, other companies...to go out and build infrastructure."
• Shanu (15:13): "Amazon brought on 3.8 gigawatts in the last 12 months so they're going to double their footprint in the next two years. Microsoft said they're going to double as well...But it is just interesting to see they're also striking deals with Neocloud."

Timestamps

• [Hyperscaler Incentives: 08:41–15:06]

B. OEMs, EPCs, & Equipment Providers (Hardware, Labor, Services)

• Provide components, systems, and services to build data centers: switch gear, cooling, turbines, etc.
• Incentive:
  • Direct beneficiaries of scarcity, as it signals endless demand, record backlogs, and pricing power for the first time in generations.
  • Eager to talk up constraints; more demand means more business at higher margins.

Notable Quote

• Shanu (17:56): "You have pricing power for the first time in generations for certain equipment providers...longer duration backlogs, better pricing."

Timestamps

• [OEMs and EPCs: 17:12–20:17]

C. Utilities

• Own and operate the grid, supply power directly to data centers.
• Incentive:
  • On one side, talking up the bottleneck justifies more capex and asset growth.
  • On the other, they're under public scrutiny over rising rates and community impacts, leading to pushback.
  • Must balance seizing the generational investment opportunity and regulatory concerns.

Notable Quote

• Shanu (21:09): "On the positive side, it's a potential business opportunity. On the negative side, I'm getting increasing amounts of pushback...utilities are conflicted in the sense of they don't want to miss out on the opportunity because if they can't bring on the power...someone will take their load elsewhere."

Timestamps

• [Utilities: 20:17–23:04]

D. Powered Land Developers & Real Estate Owners

• Acquire land, secure interconnection/power, and sell readied sites to data center builders.
• Incentive:
  • Directly benefit from talking up scarcity—makes "powered land" more valuable, accelerating deal flow and prices.
  • Scarcity multiplies the premium for fast-track, shovel-ready sites.

Notable Quote

• Shanu (23:23): "Their incentive is to talk up the constraints as well, because it increases the value of the asset they're owning...anything that accelerates you through the constraint is valuable..."

Timestamps

• [Land Developers: 23:04–24:59]

E. Chipmakers (Nvidia, Custom Silicon Designers)

• Supply compute chips (GPUs, TPUs, etc.) central to AI model training and inference.
• Incentive:
  • Power bottleneck narrative justifies persistent demand for their most efficient chips. Scarcity enhances pricing power and margins.
  • "Performance-per-watt" becomes a differentiator when power is limited.

Notable Quotes

• Shanu (26:17): "If we are power constrained...the Nvidia chip holders, actually the TCO advantage they have versus less efficient chips actually goes up..."

Timestamps

• [Chipmakers: 24:59–27:22]

F. Who Would Downplay the Power Constraint? (27:42–32:38)

• Independent Power Producers (IPPs):

  • Already own power assets; want high electricity prices, so they may underplay the need for new supply to keep markets tight and margins high.

• Natural Gas E&P Companies:

  • Benefit from high prices, so may not want to see excess capacity built.

• LNG Providers:

  • Rely on cheap domestic gas for export arbitrage; they want more production (and thus, lower prices), so actually have reason to call for more drilling and supply.

Notable Quote

• Shanu (27:42): "If you're an independent power producer...and those [constraints] continue to grow, they generate a really healthy incremental margin on that. Right. Because they're not really building out new assets...that's extremely profitable for them."

4. Where Is the Narrative Headed?

• Over the last 12-18 months, the power bottleneck narrative has gained dominance.
• Transitioned from understanding the scale of AI-driven demand to analyzing returns on invested capital (ROIC) versus infrastructure spending.
• The open question: If the power bottleneck were resolved, would demand stay as high, and would infrastructure investments still pay off?

Notable Quote

• Shanu (33:10): "If we had unlimited power, unlimited constraints now that were all solved, would the AI trajectory still be as strong as it is today? And that's the question that we're getting into..."

Timestamps

• [The Narrative: 32:38–35:10]

Memorable & Insightful Moments

• [04:57] Shanu on why examining incentives is crucial:
  "So many times I have folks coming to me from earnings calls...saying I heard this from X party or this from Y party and that's completely at odds with what they heard from another player down the stack."

• [11:29] Shayle on hyperscaler strategy:
  "There's a very clear incentive for them to say this power bottleneck is huge and insurmountable and we need to have a mobilization the likes of which we've never seen..."

• [21:09] Shanu on utility conflict:
  "Utilities are conflicted in the sense of they don't want to miss out on the opportunity because if they can't bring on the power or they aren't permitted to bring on the power, someone will take their load elsewhere..."

• [26:17] Shanu on Nvidia’s competitive edge:
  "Since we are power constrained and that constraint is expected to get worse and power prices rise, the Nvidia chip holders...the TCO advantage they have...actually goes up in that scenario."

• [33:10] Shanu on the narrative’s evolution:
  "I think what it turned into recently now is folks are getting into that ROIC question...is that generating positive ROIC? And that question mandates, are they generating revenue and dollars from it?"

Timestamps for Major Segments

• 02:52 — Introduction to the AI/power constraint debate and frequency spike in corporate discourse
• 04:57 — Shanu introduces the idea of incentive analysis
• 07:35 — Discussion of major actors: hyperscalers, OEMs, EPCs, utilities, developers, chipmakers
• 08:41–15:06 — Deep dive into hyperscaler (cloud giant) incentives and strategies
• 17:12–20:17 — Hardware, labor, and equipment providers’ incentives
• 20:17–23:04 — Utilities’ conflicted position and public accountability
• 23:04–24:59 — Powered land and real estate developers’ perspective
• 24:59–27:22 — Chipmakers (esp. Nvidia) and their leverage in scarcity
• 27:42–32:38 — Who wants to downplay the power bottleneck and why (IPPs, E&Ps, LNG)
• 32:38–35:10 — Narrative trajectory, market cycles, and open questions about lasting value
• 35:10–End — Wrap-up, summary, and a look ahead

Summary & Takeaway

The episode reveals how a diverse cast of players in the AI, data center, and energy infrastructure space have overlapping yet sometimes subtle differences in how they talk about the "power bottleneck" facing AI growth. Most benefit from amplifying the narrative—either for pricing power, deal flow, or regulatory leverage—while only a handful (like existing power providers or LNG exporters/importers) may have reasons to downplay it.

Critical thinking about economic incentives is essential as energy, tech, and investment narratives evolve. The “power bottleneck” story may be true, but understanding who shouts loudest (and why) provides essential context for interpreting market moves and public messaging.

Host's Closing Remark:

• Shayle (35:10): "Thank you for helping me think through all the complicated incentives that are out there, mainly to just talk about how big a problem power is. But we'll have you back on when things take a turn, as they inevitably will."