While Microsoft didn’t offer a specific forecast for its AI capital expenditures for the next quarter or coming year, the company’s chief financial officer, Amy Hood, said that the company’s total spend will “increase sequentially, and we now expect the fiscal year 2026 growth rate to be higher than fiscal year 2025.”

Tech companies are making these ambitious plans for more capital spending under the assumption that demand for AI will only continue to grow. But some analysts are raising concerns that the AI market is a bubble and will eventually burst.

Those worries are being fueled by announcements about enormously expensive, multi-year data center projects and staggered investments. Last month, Nvidia said it would invest “up to $100 billion” in OpenAI, provided that the ChatGPT maker builds and deploys at least 10 gigawatts of AI data centers using Nvidia’s chips. OpenAI, meanwhile, said just yesterday that it was planning to develop 30 gigawatts of computing resources worth $1.4 trillion.

Microsoft has committed to putting a total of $13 billion in OpenAI, and it continues to use the company’s frontier AI models, but took a $3.1 billion hit in net income this quarter due to losses from that investment. Microsoft said that the ongoing nature of its partnership with OpenAI will result in increased volatility. Going forward, Hood said, the company will exclude any impacts from its OpenAI investment in its financial outlooks.

Microsoft CEO Satya Nadella told analysts there are two “critical” things to consider about how the company views its capital expenditures. The first is that it is finding ways to make its fleet of data centers “fungible,” or interchangeable, meaning they can be easily modified to meet changing customer demands in the future. The second is that the company is expecting to continually modernize its infrastructure.

“It’s not like we buy one version of Nvidia and load up for all the gigawatts we have. Each year, you buy, you ride Moore’s Law, you continually modernize and depreciate it, and you use software to grow efficiency,” Nadella said.

Mark Moerdler, a senior research analyst covering global software at Bernstein, says that Microsoft is “building capacity in tranches over time and can shift resources, which gives them a lot of protection.” But, he added, “Is there an overall AI bubble? [It’s] possible, and that they did not answer.”

Wet meadows, steep slopes, and loose ground often present a challenge to agricultural vehicles. A new drive system that gets off-road vehicles safely through difficult terrain has been developed by researchers of Karlsruhe Institute of Technology (KIT) together with a partner from industry. It replaces conventional differential gears with an independent gearbox on each wheel. This way, it is possible to cope with terrain that was impassable before.

Vehicles such as tractors or slope mowers have been equipped with conventional differential gears until now. They ensure that the wheels of an axle rotate at different speeds when cornering—this operating condition is called open differential. The drawback is that if one wheel loses grip, it starts slipping and the axis’s second wheel stalls. This results in reduced traction.

A locked differential, on the other hand, ensures that both wheels of an axle are linked to each other and that they rotate synchronously. Thus, the vehicle can also manage rough terrain, for example when driving on meadows, snow, or muddy ground. However, cornering is not possible.

Two principles, one system—advantages in off-road terrain

The new drive system compensates for the disadvantages of both principles: It improves wheel grip and at the same time enables exact speed compensation when cornering because it has a gearbox with individual speed control on each wheel.

“The system automatically adjusts the wheel speeds to the driving situation, so that it precisely distributes the complete mechanical force from the powertrain to the wheels while controlling individual wheel speeds at the same time,” says Stefan Herr, leader of the Drive Technology research group at KIT’s Institute Mobile Machines.

This way, all wheels rotate with optimum speed at maximum force transmission—the vehicle is able to move even in difficult situations.

“A tractor equipped with the Line Traction System provides more performance and better safety by getting the power to the ground—even on steep slopes or uneven ground,” says Herr.

“Our test vehicle moves on where others stop. Farmland that have been unusable so far or had to be mowed by hand can now be worked by machines.” Possible uses include mowing steep slopes along motorways or meadows in mountainous regions.

Another great advantage of the system: The conventional drivetrain with a central drive unit is preserved. This makes for a compact and economic overall system without an increase in weight. Either a combustion engine or an electric motor can be used as the primary drive.

“The system is also suitable for emission-free drives and thus future-proof,” explains Herr.

The technology is the result of a cooperation with Müller Landmaschinen GmbH, the company that invented the system. In a series of projects, the partners developed and studied the system from the initial idea to the pre-production series.

“Our research is closely linked to practice—we bring knowledge to the road or field,” says Herr. “In addition, students and doctoral researchers have been involved in the research work right from the start. This is an opportunity for them to provide input to ongoing projects and contribute to innovations early on.”

Renewable energy sources like wind and solar generation now account for over 20% of electricity in the U.S., and keep growing after large-scale production has more than doubled since 2000.

Still, high-profile power failures illustrate persistent challenges from the lack of available capacity to provide enough energy at times of need, said Chiara Lo Prete, an associate professor of energy economics in the John and Willie Family Department of Energy and Mineral Engineering at Penn State.

The issue isn’t insufficient generation, but an unreliable ability to deliver ample power when customer use spikes, particularly where renewable resources and natural gas dominate power production, Lo Prete said. To better support the clean-energy transition, she and colleagues at a Washington, D.C.-based nonprofit recently studied 11 electricity market design proposals under consideration by grid operators. These designs put forward different approaches to guide energy generation and sources, as well as use across every sector of the energy market.

The proposals, yet to be tested in the market, range from a modest variation on current market designs to a complete overhaul. Researchers organized proposals into five categories from least to most dramatic, including concepts for long-term contract auctions and a two-pronged approach combining long- and short-term markets.

“Market structures should allow utility operators to recover both fixed and variable costs so they foster greater system reliability overall,” Lo Prete said.

Findings published in the journal Energy Economics spotlight key questions confronting utility decision makers and can shape more research into adjusting electricity markets. Lo Prete explained that forecasting overall demand—expected to see historic growth of 25% by 2030 and 78% by 2050—will be especially difficult as transportation electrifies and more data centers come online.

Mandatory “forward contracts,” or advance obligations by distributors to purchase specific amounts of electricity from power generators, could help support investments in resources that are instrumental in meeting decarbonization objectives, she said.

Lo Prete noted the February 2021 system failure in Texas that left more than 4.5 million homes without power; rolling outages in California in August 2020; and near-blackouts, also in the Golden State, in September 2022. In each instance, the underlying problem was a lack of accessible energy in the moment of greatest demand, she said.

Such situations have led grid operators to weigh the market approaches reviewed by researchers in their study, Lo Prete said. Reforms on the table would attempt to accommodate ongoing shifts in power generation, whether through longer-term auctioning of future electricity supplies, more centralized resource planning or other mechanisms like so-called “swing contracts.” They seek to ensure the availability of power production capabilities for dispatch in future operating periods.

“When the markets were restructured in the late 1990s, the energy system was very different from the one we have today,” Lo Prete said.

At that point, the system centered on thermal power plants driven by fossil fuels and nuclear energy. Utility markets today aren’t structured to integrate and sustain the renewable sources and large-scale electricity storage that have taken root since then.

Still, maintaining a range of power generation is vital, as older facilities like coal-powered plants contribute less to the power supply but remain important to consistent service, Lo Prete said. Last year, coal accounted for 8% of primary energy consumption nationally, down from 23% in 2000, according to a congressional report.

For their study, Lo Prete and her research partners at Resources for the Future (RFF) examined market proposals to assess energy affordability, efficiency, energy adequacy and other factors. Lo Prete, a faculty associate of the EMS Energy Institute and the Institute of Energy and the Environment and a Wilson Faculty Fellow at Penn State, completed a sabbatical at RFF ahead of the paper’s publication.

Among their conclusions, researchers found the organization of regulatory oversight makes it more difficult to incorporate clean-energy policy into electricity markets. Those “forward contracts” requiring specific electricity purchases could promote energy storage and power systems’ overall ability to fulfill customer needs, they found.

At the same time, the authors said it was tough to make recommendations or endorse one proposal over others, in part because the concepts were in different stages of development. Researchers cited specific concerns over inadequate investment incentives in current energy markets.

The authors also urged cooperation among energy-market researchers, encouraging them to make proposals accessible to broad audiences and facilitate input and feedback from those constituents. Communication will help researchers understand concerns and possible points of confusion, they said.

At Resources for the Future, contributing to the paper were Karen Palmer, senior fellow and director of the Electric Power Program, and associate fellow Molly Robertson.