NEW YORK — In the race for AI dominance, American tech giants have the money and the chips, but their ambitions have hit a new obstacle: electric power.
“The biggest issue we are now having is not a compute glut, but it’s the power and… the ability to get the builds done fast enough close to power,” Microsoft CEO Satya Nadella acknowledged on a recent podcast with OpenAI chief Sam Altman.
“So, if you can’t do that, you may actually have a bunch of chips sitting in inventory that I can’t plug in,” Nadella added according to AFP.
Echoing the 1990s dotcom frenzy to build internet infrastructure, today’s tech giants are spending unprecedented sums to construct the silicon backbone of the revolution in artificial intelligence.
Google, Microsoft, AWS (Amazon), and Meta (Facebook) are drawing on their massive cash reserves to spend roughly $400 billion in 2025 and even more in 2026 — backed for now by enthusiastic investors.
All this cash has helped alleviate one initial bottleneck: acquiring the millions of chips needed for the computing power race, and the tech giants are accelerating their in-house processor production as they seek to chase global leader Nvidia.
These will go into the racks that fill the massive data centers — which also consume enormous amounts of water for cooling.
Building the massive information warehouses takes an average of two years in the United States; bringing new high-voltage power lines into service takes five to 10 years.
The “hyperscalers,” as major tech companies are called in Silicon Valley, saw the energy wall coming.
A year ago, Virginia’s main utility provider, Dominion Energy, already had a data-center order book of 40 gigawatts — equivalent to the output of 40 nuclear reactors.
The capacity it must deploy in Virginia, the world’s largest cloud computing hub, has since risen to 47 gigawatts, the company announced recently.
Already blamed for inflating household electricity bills, data centers in the United States could account for 7 per cent to 12 per cent of national consumption by 2030, up from 4 per cent today, according to various studies.
