Energy Costs Will Decide Which Countries Win the AI Race, Microsoft's Nadella Says

"As governments and companies accelerate investments in AI infrastructure, Nadella argued that economic growth will increasingly hinge on the cost of powering these systems. " GDP growth in any place will be directly correlated to the cost of energy in using AI," he said, framing energy as a foundational input to the next phase of digital transformation, making energy costs in the AI race a huge component."

"Nadella described the emergence of a new global commodity: AI "tokens," the basic units of computation purchased by users to run AI models. "The job of every economy and every firm in the economy is to translate these tokens into economic growth," he said. " If you have a cheaper commodity, it's better. " In this context, access to low-cost, reliable energy becomes a structural advantage rather than a marginal consideration."

"Hyperscale cloud providers are already acting on this reality. Microsoft, one of the world's largest hyperscalers, has sharply increased capital expenditure to support AI workloads. The company said earlier this year that it expects to spend around $80 billion on AI data center construction in 2025 alone. Notably, Nadella said roughly half of that investment is being deployed outside the United States, underscoring how energy availability and pricing are shaping geographic decisions."

Energy costs will play a decisive role in determining which countries lead the global AI race. National competitiveness in AI is directly linked to the price of energy required to run large-scale computing systems. Economic growth will increasingly hinge on the cost of powering AI infrastructure. AI tokens function as a commodity representing units of computation purchased to run models, and translating tokens into economic growth requires affordable energy. Hyperscale cloud providers are increasing capital expenditure on AI data centers, with substantial investments planned in 2025 and significant deployment outside the United States. Public support for AI infrastructure depends on clear economic and social benefits.

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