How AI Is Transforming Data Centers and Ramping Up Power Demand

As technology companies race to develop cutting-edge artificial intelligence (AI) models, data centers have become some of the most important infrastructure in the world. 

There are signs that AI has the potential to automate swaths of the global economy, from white-collar work to drug discovery, and to increase productivity. To capitalize on the AI boom, corporations are breaking ground on new data centers from Texas to Shanghai, filling them with next-generation graphics-processing units (GPUs), and building high-voltage power connections to many terawatt-hours (TWh) of additional electricity generation. 

 

The outlook for data center demand and power consumption

A new generation of data centers that can support advanced AI is rapidly being built up. In the US alone, spending on the construction of this infrastructure has tripled over the last three years, according to Goldman Sachs Research. Even as new facilities come online, occupancy rates remain near record highs for third-party leased data-centers across most US markets. 

Global power demand from data centers, meanwhile, is forecast by Goldman Sachs Research to rise 165% by 2030 (from 2023 levels).

That said, Goldman Sachs Research analysts are on heightened alert for any signs of market weakness. That could stem from a lack of ways to monetize the new technology or innovations that make it cheaper to build and commoditize these models. 

Goldman Sachs Research forecasts data center demand to grow by about 50% to 92 GW by 2027, with a compound annual growth rate of 17% between 2025 and 2028. In a downside scenario where demand for AI turns out to be lower than expected, that growth rate could be closer to 14%. In a more bullish scenario, in which GPUs require even more power than predicted, or customer demand for AI models is higher than expected, the compound annual growth rate could reach 20%.

While AI’s ultimate impact on society and the corporate bottom line will take time to determine, companies are pouring in capital to build a new global system of data centers for the modern economy. 

 

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