Energy costs will be key in the race to develop AI, Microsoft CEO Satya Nadella said in Davos.
As countries race to build AI infrastructure to capitalize on the technology's promise of huge efficiency gains, Nadella told the World Economic Forum (WEF) on Tuesday that „GDP growth anywhere will be directly correlated” to the cost of energy in using AI, according to CNBC.
He pointed to the existence of a new global commodity called „tokens” - basic processing units that are bought by users of AI models, enabling them to perform tasks.
The task of every economy and every firm in the economy is to translate those tokens into economic growth, then if you have a cheaper commodity, it's better.
Satya Nadella
Hyperscalers like Microsoft have spent billions building data centers to power AI.
Microsoft said in early 2025 that it expects to spend $80 billion building AI data centers. A total 501TPTP3T of the tech giant's spending is outside the US, Nadella said.
„I would say that we will quickly lose even the social permission to use something like energy, which is a scarce resource, to generate these tokens, if these tokens do not improve health outcomes, education outcomes, public sector efficiency, private sector competitiveness in all sectors”Nadella said.
Europe has some of the highest energy costs in the world, which have risen after Russia's large-scale invasion of Ukraine in 2022 and subsequent sanctions.
„It's not just the production side”Nadella said. „If you think about TCO [total cost of ownership], it's like, are you a cheap power producer? Can you build data centers? What's the silicon cost curve in the system?”
