Peter Ciampelli (3:23)

At least one company said that the return on cost was better with Amazon's AI. Can you tell me about Nimbus Therapeutics? What was their experience like using Nova?

Sean McClain (3:33)

So Nimbus Therapeutics needs a very specific thing. They need somebody to look at a bunch of potential molecules as they look for novel molecule designs that could possibly be turned into medicines which then they could turn on and sell to drug companies. So what they found is that Nova responded just as well as a version of Anthropic's Claude, which is seen as, you know, a market leader at one tenth the price.

Peter Ciampelli (4:02)

Is this revitalized focus on AI and Amazon's plan for spending around it, leaving investors confident?

Sean McClain (4:10)

I think everybody's a little bit worried about how much money is going out the door towards building these data centers and developing these AI models. Everybody is, as investors would say, price to perfection in this market. So if you're not executing, then your stock market will reflect that instantaneously. And I think in Amazon's case, the concern is how much money is going out the door this year. In particular, Amazon says they're going to spend $200 billion on capital expenditures this year, most of which is going towards building out AI infrastructure. And that is roughly what they spent in the preceding two years. And they're spending so much that they're probably going to burn cash, at least in the first quarter. And that has investors worried. Is the business going to come in fast enough to justify how much money is going out the door to get ready for these AI customers?

Peter Ciampelli (5:02)

That was Wall Street Journal reporter Sean McClain. Which AI models do you use the most? If you're a listener on Spotify, be sure to leave us a comment with your thoughts. Coming up, power grids have gotten more strained as big data centers pull more and more energy. But sudden data center drop offs might be the bigger threat. That's after the break.

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Peter Ciampelli (5:50)

Data centers draw massive amounts of energy and in order not to overwhelm the power grid operators need to figure out how to keep the supply of electricity and the demand for electricity flowing very stably. So what happens when the electricity in roughly 40 data centers, enough to power a million houses, drops off all at once? The Wall Street Journal's Katherine Blunt joins our Katie Dayton to explain.

Katie Dayton (6:15)

Katherine, what happened to this cluster of data centers in Virginia last year? Do we know exactly what went wrong at this point?

Katherine Blunt (6:22)

Yeah. So it's fairly straightforward what happened. There was about 42 data centers that could kind of went offline all at once in response to a problem on a nearby transmission line. Data centers are equipped with technology that monitor for disruptions in power quality to make sure that they can always operate and operate well and not have damage to the data center equipment. So during this brief disturbance, all the data centers responded to it by switching to backup power. And if one or two do that, that's not really an issue. But to have so many go offline all at once created sort of the prospect of instability on the broader power grid.

Katie Dayton (6:58)

So a lot of reporting on data centers so far has been focused on what happens if they take up too much electricity from the grid. I personally wouldn't have thought it would be an issue per se if they stopped using electricity. Can you explain why it's a problem when that happens?

Katherine Blunt (7:14)

The issue here is that on the grid, electricity and supply and demand must be in constant balance, because if there's either too much supply or too little supply to meet demand, then there is the risk of cascading failure across the system, significant damage to power plant infrastructure. It is the role of the grid operator to make sure that that balance is always maintained. So in this particular case, the grid operator is called PJM Interconnection. And when these data centers all went offline at once, it was equivalent to 1800 megawatts. That's pretty significant. It's like equivalent to the output of a very large power plant. And so we understand it's a problem if there's not enough supply to meet demand. But if there's too much supply flowing onto the grid and that demand is no longer there, you have the same sort of risk to the rest of the system and the infrastructure.

Katie Dayton (8:06)

How big a deal was this for PJM and also the wider data center industry?

Katherine Blunt (8:12)

Fortunately for everybody who uses the power grid, this wasn't that big of a deal. PJM has contingency plans in place for something like this happening. They'd had to take some measures to keep supply and demand imbalance. It didn't exceed what they were able to do quickly in this particular case. But the concern that PJM and others have is that as more of these enormous data centers come online, what if more of them trip offline all at once? Because then that would really stretch the grid operators ability to respond quickly enough to avoid more significant impact to the system. So this actually happened twice within PJM within a matter of months. There was another incident, a very similar one, that happened in July of 2024 and then this occurred in February of 2025. So it's become an industry wide issue and the subject of a lot of discussion of how do you make it so that these data centers stay online even if there's a brief disturbance in power quality, which happens a lot.

Katie Dayton (9:05)

And what sense do you get that this is a growing cause of concern for the wider tech industry?

Katherine Blunt (9:11)

It was just the subject of conversation. There was a sort of a regulatory body that had a conference that focused on this and other risks and assembled a lot of tech folks to sort of weigh in on the kind of the wonky technical side of, of this and see how the risk can best be mitigated. But it is a growing challenge across the entire country because you're seeing data centers being developed in many, many different regions, very large ones, and there's a lot of interest, I think, in trying to get ahead of the risk and to solve for it. But it's happened a few times already and there's concern that if it happens again with more facilities, that could be really challenging.

Katie Dayton (9:47)

Do you get a sense of what that might look like, those solutions and what the industry has been discussing?

Katherine Blunt (9:53)

Yeah, so Dominion Energy is a utility company that operates the transmission lines that were involved in the disturbance and the issues that we're talking about with the demand loss. And they've been working with tech companies to have specifications in order to hook up to the power grid. Their data centers have to be calibrated to be able to withstand certain disturbances so that they're not tripping off unexpectedly. Basically it's a technical problem to solve. Like how do you calibrate the sensors on the data center to be able to sort of what's known as ride through minor disturbances rather than immediately switching to backup.

Katie Dayton (10:27)

And for the average person, how bad could an outage like this be for

Katherine Blunt (10:32)

them if it happened so that the drop in demand damaged the rest of the system? You're looking at outages for everybody. It's hard to quantify exactly what that would look like. But in that region, power, power plants would trip offline, they would probably be subject to some sort of significant damage. And so to repair that would take a lot. That's extreme. But that's what could potentially happen if the drop in demand was not something the grid operator could handle.

Peter Ciampelli (11:01)

That was Wall Street Journal reporter Katherine Blunt, joined by our Katie Dayton. And that's it for Tech News Briefing. If you're a listener on Spotify, be sure to leave us a comment. Today's show was produced by Anthony Banci and Julie Chang with supervising producer Katie Ferguson. I'm Peter Ciampelli for the Wall Street Journal. We'll be back later this morning with TNB Tech Minute. Thanks for listening.

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