Energy will determine the winner in the AI race: highlights from Microsoft CEO's Davos speech

Countries seeking leadership in artificial intelligence should focus on affordable energy. This was stated by Microsoft CEO Satya Nadella during a speech at the World Economic Forum in Davos, as quoted by CNBC.

"GDP growth in any country will be directly related to the energy cost of using AI," he said, emphasizing that this factor will determine the competitiveness of economies in the era of hyper-scale computing.

Nadella drew a parallel between AI and commodity markets, calling the "tokens" in users' possession - units of computation in a neural network that use data center time and energy - the new global currency. "The job of any economy is to turn tokens into economic growth. And if you have that commodity at a lower cost, you win," Nadella explained.

At the same time, the Microsoft CEO warned that society could quickly lose tolerance for the wasteful use of a scarce resource - energy. "We can quickly lose even social permission to use energy - a scarce resource - to generate tokens if those tokens don't improve [the situation in] health care, education, government efficiency, and private sector competitiveness," Nadella said, referring to how the cost of electricity in the U.S. has skyrocketed after large companies began launching data centers that consume energy like entire cities.

Nadella noted that energy prices in Europe are among the highest in the world. This creates a serious barrier to the development of AI in the region. Prices rose after February 2022 due to the conflict in Ukraine and subsequent sanctions against Russia, CNBC recalls.

"It's not just the production [of energy] that matters," Nadella emphasized. - The Total Cost of Ownership is important: how cheaply do you produce energy, can you build data centers, how much does an AI processor cost in a system?"

According to the Microsoft CEO, to remain competitive, Europe must think globally, not just within its own market. "Europe's competitiveness is the competitiveness of its products on a global scale, not just within the domestic market. Sometimes when I come to Europe, I get the feeling that the conversations are only about Europe," Nadella said.

He recalled that the European economy has thrived over the past 300 years thanks to its ability to produce what the world needed. To maintain its position, the EU needs to invest in energy and "tokens" - the backbone of AI infrastructure, Nadella said.

"When we come to Europe, everyone talks about sovereignty," the Microsoft chief noted. - But Europe should be more concerned about access to its industrial companies, financial institutions ... and not just hope that by protecting Europe you will become competitive. You will only become competitive when products from Europe are competitive around the world. I think that's what needs to change."

Nadella reminded us that hyperscalers like Microsoft are spending billions of dollars building data centers to provide AI platforms with the power capacity they need.

In early 2025, Microsoft said it plans to spend $80 billion to build data centers, with half of that investment to come from countries outside the U.S., CNBC writes.

This article was AI-translated and verified by a human editor