Wedbush said U.S. President Donald Trump’s initiative to ensure that Americans do not pay higher electricity bills due to data centers removes a “headache” for the administration but creates a larger bottleneck with big tech companies looking to build out large data center footprints.
Trump said on Truth Social that the administration is working with major tech companies to make “major changes” to ensure American consumers don’t pay higher electricity bills with data centers taking more power consumption. Trump also noted that the big tech companies that build these data centers must “pay their own way.”
Following this, Microsoft announced its initiative called Community-First AI Infrastructure. The U.S. tech giant made several commitments, including, paying to ensure their data centers don’t increase consumers’ electricity prices and minimizing water use and replenishing more of the water than they use.
Wedbush said they expect other big tech organizations to follow soon after given the increased scrutiny from federal, state, and local governments to address major concerns with large-scale data center buildouts.
“While this initiative alleviates a major headache from the Trump administration, this will create a larger bottleneck with big tech organizations looking to build out large data center footprints as quickly as possible without impacting the bottom-line with this potentially slowing down the data center buildouts with the US entering a crucial time of the AI Revolution with the US facing significant energy shortages/issues to fuel data center buildouts,” said analysts led by Dan Ives.
The analysts noted that this is the first time the federal government took a stance against rising electricity costs, but this has been an incremental focus from state and local governments, including Abigail Spanberger, Virginia’s governor-elect, who noted that data centers should “pay their own way and their fair share” of rising electricity costs with lawmakers continuously grappling how to balance tax revenue boosters from these buildouts with greater concerns across communities.
“With China spending incrementally more across new and existing power technologies into 2030 putting greater pressure on the US to fuel its lofty AI ambitions, we believe this will be a continuous back and forth battle between Big Tech players and the Trump administration with data center buildouts an important aspect of fueling the AI Revolution over the coming years,” said Ives and his team.
The analysts added that while the AI arms race will continue throughout the next decade, the race for clean energy remains an incremental focus to fuel the AI Revolution as it provides a clean and affordable way for the U.S. to fund future AI opportunities.
Meta Platforms (META) was first in line to set up its decade-long buildout of energy deploymentinitiatives after the signing of 6.6 gigawatts of nuclear power with Vistra, TerraPower, and Oklo by 2035 which builds on its Constellation Energy deal announced last year, the analysts noted.
Alphabet’s (GOOG) (GOOGL) Google has also followed a similar path to secure clean, affordable energy after its acquisition of Intersect Power focused on enabling more data center and generation capacity to come online faster while accelerating energy development. Google also inked an agreement with Brookfield Renewable Partners to provide 670 megawatts of hydroelectric capacity and up to 3 gigawatts of carbon free hydroelectric capacity across the U.S. to continue adding power domestically, according to the analysts.
The analysts noted that Microsoft has also added more clean energy capacity after signing a five-year, $6.2B contract with Nscale Global and Aker to provide computing power to large-scale AI infrastructure in Norway powered entirely by renewable energy.
“We continue to expect Big Tech organizations to partner/acquire future energy sources or sign more contracts with clean energy players to fuel the lofty AI ambitions with energy remaining the biggest constraint in this AI arms race playing out front and center,” said Ives and his team.