AI Labs Stop Renting and Start Buying

Anthropic set out to buy electricity from a Texas supplier. It ended up buying the supplier's place in line at Caterpillar instead.

The Financial Times reported on Sunday, as relayed by TheEnergyMag, that Anthropic has agreed to pay $3.4 billion for gas-fired generator commitments to power data centers. The deal covers 1.7 gigawatts of heavy-duty generators ordered through San Antonio-based OnePWR Solutions. The FT described it as the largest known single purchase of power-generation equipment by an AI lab. Anthropic bought the commitments in late September and took over OnePWR's orders for Caterpillar generators without acquiring the supplier itself. It had first planned to buy OnePWR's electricity.

The detail matters more than the dollar figure. A lab that once rented compute is now holding the equipment orders that sit upstream of the compute. The catch is that the companies filling those orders say they are already full.

The queue is the product

Piper Sandler's transaction disclosure lists a $3.4 billion sale of OnePWR's power-generation platform to an unnamed AI lab in September. The bank does not name Anthropic, so the FT's attribution stands on its own reporting. Either way, the buyer wanted a place in a manufacturing queue, not a power contract.

Caterpillar's numbers explain why. Its third-quarter sales and revenues rose 17% to $20.7 billion, according to its earnings release. Power Generation growth came mainly from turbines and large reciprocating engines, primarily in data center applications. The Power & Energy segment alone booked $8.784 billion, up 18% from $7.463 billion a year earlier.

The order book is the bigger story. Investing.com's summary of the company's slides called the backlog a record level for Caterpillar. Manufacturing Dive reported that it reached $78 billion, almost double its level a year ago. CEO Joe Creed told investors: "Our third-quarter results reflect the durability of our end markets, with strong order rates and a record backlog." He also called the quarter its "highest sales quarter ever" on the earnings call, per Manufacturing Dive.

Wall Street did not cheer. Caterpillar shares fell 7.65% in premarket trading to $657.47 despite beating estimates, Investing.com reported, as investors fixated on capacity constraints and a cautious fourth-quarter outlook. Management said production capacity, particularly in Power & Energy, is the main limit on faster growth. Creed said the company has moved to expand output of large reciprocating engines and turbines. Demand is not the problem. Factory floor space is.

Switchgear hits the same wall

Eaton, which makes the electrical gear that sits between a generator and a server rack, describes the same squeeze. It reported record third-quarter sales of $8.9 billion, up 28% year over year, according to Utility Dive. Its Electrical Americas backlog rose to $16 billion, up 33% from a year earlier, while orders climbed 39% on a rolling 12-month basis.

CEO Paulo Ruiz pointed to the pipeline behind those orders. "We track the [worldwide] projects that are announced, and now they amount to 366 GW," he said of announced data center projects worldwide, setting that figure against the capacity actually installed. Then came the admission: "Demand continues to run ahead of what we can convert."

Eaton is also buying its way deeper into the building. It paid about $9.6 billion in March for Boyd Thermal, which Ruiz said will help it develop integrated power and cooling architectures for data center customers. It is betting on solid-state transformers too. A 1-MW unit tested by the Electric Power Research Institute, the New York Power Authority and North Carolina State University cut power losses in half against a traditional transformer setup, Utility Dive reported. A McKinsey analysis cited by the outlet says data centers built on 800-volt direct-current architecture could cut non-IT capital spending by up to 18%. Ruiz was careful about the pace of that shift. The move from AC to DC is real, he said, but "the timing of that transition is not under our control."

Heat becomes a materials problem

A more distant piece of this buildout works at the scale of the chip itself. Diamond Foundry says modern AI processors pack enormous power into microscopic regions of silicon, and that diamond's thermal conductivity can spread that heat at the material level. On Nov 5 it said it had grown a single continuous diamond crystal at wafer scale. Tom's Hardware reported that a company graph suggests a D300 wafer, matching the size used in leading-node chips, could be possible before 2030. Diamond Foundry CEO Martin Roscheisen said of the milestone: "it makes D300mm predictable as well."

Skepticism is warranted. Interesting Engineering reported that the sample is unpolished, straight from growth, and that yield, production cost and suitability for commercial chip fabrication are undisclosed. Diamond is also no simple substitute for silicon, because controlling its electrical properties through doping is hard. High-purity single-crystal diamond conducts heat at roughly 2,000 watts per meter-kelvin at room temperature, several times copper, but conductivity is not a product.

Others are working the same problem from different angles. Tom's Hardware reported that De Beers Group is building a copper-plated diamond composite for cooling AI and high-performance computing hardware. It also reported that Akash Systems won $18.2 million in CHIPS Act funding in 2024 for gallium nitride fused with synthetic diamond, which it claims will cut temperatures by 20 degrees C. Diamond Foundry, for its part, is planning a $2.77 billion project in Spain backed by the European Chips Act.

The utility on the other side of the meter

Utilities face the same arithmetic, and Ameren shows it. Its five-year capital plan totals $38.1 billion from 2027 through 2031, an increase of more than 20% over the prior plan, per the Q3 earnings call transcript carried by FOOL. It had 2.8 gigawatts of electric service agreements signed at the end of the quarter, with sales from them expected to reach full capacity by 2030. Group President Michael Moehn said Google and Amazon announced Missouri projects in the second quarter with a combined planned investment of $25 billion.

The response is to build, and to order early. Ameren plans about 7.7 gigawatts of new generation from 2027 through 2031, which would lift Ameren Missouri's installed capacity by roughly 80%. It says it is standardizing designs and securing long-lead components up front. The company's West Alton facility, a 2.1 gigawatt project, is expected in service in 2031. CEO Martin Lyons said that under Missouri Senate Bill 4, large-load customers will pay the power and infrastructure costs their operations drive.

That echoes Anthropic's own February pledge to fund the grid upgrades its data centers need and to bring new generation online to match their load. On Nov. 2 the company disclosed plans to spend more than $895 billion in the years ahead, mostly on computing capacity and infrastructure.

Taken together, the buyers are no longer waiting for the supply chain to deliver. They are reaching down into it, taking positions in the engine plant, the transformer line and the diamond furnace. But every supplier in this chain says the same thing: the order book is longer than the factory. A lab that owns the place in line still has to wait for the machine at the front of it.