Saira Imran Big tech companies like Google, Microsoft, Amazon, and Meta are spending around $400 billion in 2025 on AI. However, Artificial Intelligence faces energy crisis and delays in building new data centers.
Microsoft CEO Satya Nadella told OpenAI’s Sam Altman in a podcast that the main challenge is no longer computing power. It is now about having enough electricity and completing construction quickly. He added that even if companies have enough chips, they can’t use them without enough power and space.
Like the dot-com boom of the 1990s, tech giants are now building the infrastructure for the AI revolution. Their goal is to create the backbone of artificial intelligence, which requires huge data centers and massive energy.
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In 2025, Google, Microsoft, AWS, and Meta are using their large cash reserves to expand AI operations. They plan to spend even more in 2026. So far, enthusiastic investors continue to support them.
These funds help solve early challenges by buying millions of chips and speeding up internal processor production to compete with Nvidia. But these chips need huge data centers that use large amounts of water for cooling.
In the U.S., it takes about two years to build a large data center and five to ten years to set up new high-voltage power lines.
Experts in Silicon Valley, known as “hyperscalers,” had already predicted an energy barrier. A year ago, Dominion Energy in Virginia had orders for 40 gigawatts of data centers—equal to the output of 40 nuclear reactors.
Virginia has now become the world’s largest cloud computing hub, with capacity reaching 47 gigawatts. But as data centers grow, they also face criticism for raising household electricity costs.
By 2030, data centers might use 7% to 12% of U.S. electricity, up from 4% today. Still, some experts believe these numbers may be exaggerated.
Jonathan Koomey, a researcher at UC Berkeley, warned that both utilities and tech firms may benefit from projecting higher energy demand growth.
If these forecasts come true, Morgan Stanley predicts a shortfall of 45 gigawatts by 2028, equal to the energy used by 33 million U.S. homes.
Because of this, several U.S. utilities have delayed closing coal plants, even though coal causes the most pollution.
The International Energy Agency (IEA) reports that natural gas, which powers 40% of global data centers, is again becoming popular due to its faster setup. For example, in Georgia, where data centers are rapidly expanding, one utility requested to install 10 gigawatts of gas-powered generators.
The Artificial Intelligence faces Energy Crisis shows how the fast rise of AI is creating pressure on global power systems. As companies continue their race in AI, finding cleaner and faster energy solutions will become essential.
