Alberta's $100B AI data centre plan 'in no way' undermined by DeepSeek shakeup, province says
AI expert says development has implications for data centre infrastructure
Alberta's ambitious plans to see $100 billion worth of artificial intelligence data centre infrastructure built in the province over the next five years are still on track despite a recent development that shocked technology shares earlier this week.
On Monday, Chinese tech startup DeepSeek unveiled a new artificial intelligence chatbot, sending tech stocks in the U.S. plunging.
The sell-off also hit Canadian companies, including the Calgary-based TransAlta. TransAlta CEO John Kousinioris has suggested the company is in discussions with multiple hyperscalers potentially interested in the company's Alberta energy campuses.
Though stocks went on to recover from some losses, the release of the free AI assistant has reshaped industry perceptions around U.S. dominance tied to the technology. DeepSeek has claimed its model performs as well as U.S.-based models at significantly lower costs.
"If proven true, the efficiencies used within DeepSeek's open-source model can be applied by the hyperscalers to their models, which would result in a more moderated demand," analysts with Evercore ISI said in a note.
The news takes on particular relevance in Alberta, a province that has made clear its aspiration to become the "most attractive place to build artificial intelligence data centres in North America."
Data centres are crucial to supporting power-hungry artificial intelligence.
The DeepSeek news suggests a potential reduction in the need for massive, centralized data centres owned by tech giants in favour of smaller, more distributed AI players, said Randy Goebel, a professor of computing science at the University of Alberta and a co-founder of the Alberta Machine Intelligence Institute.
"The … assessment from private investors is probably going to be, yes, we have to change how we orchestrate the development of the framework, because there are likely to be many more players, not just a few big players," he said.
"So we have to manage the infrastructure to be able to do that."
As part of its pitch, the Alberta government has highlighted the province's deregulated electricity market as a draw for operators, who can utilize it for off-grid power generation. In addition, the province's cold climate is viewed as a plus given the huge amount of heat that such facilities produce.
Experts have warned that such plans could significantly increase Alberta's carbon emissions, which could offtrack the province's broader plans to implement a carbon-neutral power grid by 2050. The province has said such technology is feasible through the utilization of carbon capture technology.
No deep concerns
The latest market fluctuations aren't raising alarm bells for the province's technology and innovation ministry.
"DeepSeek does not in any way undermine Alberta's AI data centre strategy," reads a statement attributed to Jonathan Gauthier, press secretary for Alberta Technology Minister Nate Glubish.
More models should increase demand for AI data centres, not decrease them, he wrote.
Gauthier went on to say that if the trend in technology continues, the global demand for power could grow at the same rate or faster.
"Alberta is excited to watch the growth of these new technologies. We foresee only increased demand for power for these models and will be ready to continue to be a destination of choice for scalable power to meet the world's AI needs," the statement reads.
Goebel, the co-founder of the Alberta Machine Intelligence Institute, said among his colleagues, there is one interpretation that suggests data centres are still a good idea, but potentially in a different way.
The market for who funds and uses these data centres might shift, changing how they operate, Goebel said.
The government's perspective is tied to expected economic and social impact, he added.
"Whether that's good or bad remains to be seen. We can't tell yet. The momentum behind government programs is a lot harder to adjust than the momentum behind private investors."
Goebel added AI should be built with careful, informed investment rather than speculative hype.
The AI arms race
Alberta isn't the only jurisdiction that has thrown its hat into the AI arms race in recent years. In a release issued last year, Prime Minister Justin Trudeau wrote that AI had "the potential to transform the economy."
The RBC Climate Action Institute recently released a report stating that local data centres were essential for "ensuring data privacy, national security, and resilience against cyber threats."
"Targeted efforts to increase AI adoption among Canadian SMEs — which account for half of Canadian GDP — could help reverse Canada's lagging productivity," the report reads.
Amid this week's earlier sell-off, U.S. President Donald Trump also weighed in on the implications of the release of the DeepSeek model while in Florida.
"The release of DeepSeek AI from a Chinese company should be a wake-up call for our industries, that we need to be laser-focused on competing to win," Trump said.
Despite the major market movement, it appears that Monday's sell-off could be a major correction within an ongoing bull market, rather than the end of growth in AI technology, said Colin Cieszynski, portfolio manager at SIA Wealth Management.
"Let's not throw the baby with the bathwater here … it doesn't seem to be the end of the world that another company has come into the space," Cieszynski said.
For provinces like Alberta in the midst of the AI arms race, there's always uncertainty to consider. But any emerging area has its risks and its ups and downs, Cieszynski said.
"There are shorter-term trends, as we've seen … there can be some very abrupt reversals in short-term sentiment, and changes, but it doesn't necessarily change the underlying longer-term trends," he said.
Those longer-term trends include corporations adopting AI to improve efficiency and effectiveness, with an overall trend of consumers and businesses adopting AI, Cieszynski said.
ABOUT THE AUTHOR
With a file from Reuters