The demand for electricity is growing hand in hand with the rapid adoption of Artificial Intelligence (AI). The data centers behind AI consume a tremendous amount of power. So as the number of data centers continues to grow, so will that demand for power to support them. Today’s weekly market commentary examines this power consumption and discusses the potential implications for investors.
The enclosed chart plots out the global power capacity of data centers, measured in gigawatts, beginning in 2022 and running through 2028. For context, the average home in the United States demands 1,000 watts. One thousand homes would demand approximately one megawatt. And one million homes would add up to one gigawatt. For additional context, the purple dashed line shows the total power demand for the entire state of New York – approximately 30 GW. California is shown by the green dashed line – approximately 50 GW. The entire country of Germany has a total power demand of approximately 78 GW and is represented by the light blue dashed line. And then for final context the total power demand of Japan is shown by the dark blue dashed line – 150 GW.
As can be seen from the chart and the data, the global power capacity of data centers has grown rapidly from 2022 to present day. Currently in 2026, global data center power capacity has already grown to exceed peak demand in all of New York State. Looking to the projected growth and estimated demand by 2028, global data center power capacity has the potential to exceed that of all of Japan. The piece explains, “in the U.S., power demand of this magnitude is outpacing what the grid can deliver, with grid connection wait times stretching five to seven years in many regions. To avoid those delays, hyperscalers are increasingly turning to onsite power generation, deploying technologies such as gas turbines, reciprocating engines, and fuel cells directly at their data center campuses.” – AOM 474
In terms of what this all means for investors, the piece explains, “we believe the magnitude of this buildout has meaningful investment implications across the power infrastructure space, including utilities, independent power producers, electrical equipment manufacturers, and grid technology providers. In our view, meeting AI’s power needs will likely require sustained capital investment well beyond the data center itself, creating potential opportunities in companies positioned to supply the generation, transmission, and distribution capacity that the next phase of AI growth depends on.” – AOM 474
We would ask that you review the attached piece at your convenience and please let us know if you have any questions or if you would like to discuss it further. And as we always end this correspondence, please remember that regardless of current momentum and regardless of the key takeaways in this weekly perspective, we will continue to monitor and manage with a thoughtful approach based on your specific long-term objectives. Thank you for your continued confidence and look forward to speaking soon.
