California Management Review

Abstract

For almost two decades, digital leaders grew as asset-light firms, scaling on software, data, and talent. The arrival of generative AI changed that logic. Compute and energy are now production inputs, not background utilities. They demand chips, cooling, sites, grids, and permits, and therefore massive capital and operating capabilities. Yet ownership of those assets is not a one-size-fits-all solution. Firms can choose from a continuum: on-demand cloud, committed cloud capacity, dedicated servers, leased data center space, hybrid core-plus-cloud, or full ownership. In this new landscape, how should AI-driven firms, from mid-sized adopters to hyperscalers, secure capacity and what must leaders do next?

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