What is the story about?
What's Happening?
Goldman Sachs Research forecasts a significant increase in global data center power usage, driven by artificial intelligence. The power consumption is expected to rise from 1% to 2% of all electricity in 2023 to as much as 4% by 2030. In the U.S., the share could more than double from 4% in 2023 to over 8% by the end of the decade. The five largest U.S. hyperscale operators, including Amazon, Microsoft, Alphabet, Meta Platforms, and Apple, are projected to spend $736 billion across 2025 and 2026. This marks a substantial increase from the $132 billion spent in 2023.
Why It's Important?
The projected increase in data center power usage highlights the growing demand for AI technologies and the infrastructure required to support them. This trend presents opportunities for utilities, chipmakers, data center operators, and related suppliers, as they stand to benefit from increased spending and demand. However, there are risks involved, as companies may struggle to monetize AI at scale or face challenges in adapting to new technologies that could lower costs and reduce demand growth. The massive investment in data centers underscores the importance of AI in shaping the future of technology and its impact on global electricity consumption.
What's Next?
As AI workloads are expected to reach 28% of total data center power usage by 2027, companies will need to invest in new facilities and technologies to accommodate this growth. The shift towards specialized graphics processing units for AI will require significant upgrades to existing infrastructure. Stakeholders will likely focus on optimizing energy efficiency and exploring renewable energy sources to manage the increased power demand. Additionally, the success of these investments will depend on the ability of AI models to deliver tangible benefits for businesses and society.
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