In the first quarter of the year, Big Tech companies are investing heavily in data centers to acquire more computing power. Alphabet, Amazon, and Microsoft have collectively invested $40 billion in this area, with a significant portion of this investment aimed at addressing the growing demand for processing power to handle artificial intelligence workloads. Meta, although not involved in the cloud business, has also announced plans to spend $40 billion on capital expenditure this year for AI-related projects, comparable to the spending plans of oil giant Saudi Aramco.
The demand for computing power for AI projects is so high that companies like Microsoft are expected to spend even more. This trend is reminiscent of the energy industry’s appetite for capital expenditures, given the significant sums involved in building and maintaining data centers for AI processes. The need for vast amounts of processing power for AI tasks translates to a heavy reliance on electricity. Dominion Energy, a major American utility, revealed that data center developers are now frequently requesting “several gigawatts” of electricity, a significant amount considering Dominion’s total installed capacity is 34GW.