Accelerate: How AI is Revolutionizing Data Centers

Key Points:

• Global power demand from data centers is expected to increase 50% by 2027 and up to 165% by the end of the decade compared to 2023.
• Large hyperscale cloud providers and corporations are building massive compute clusters to train large language models, driving demand for data centers.
• The balance of data center supply and demand is expected to tighten, leading to increased occupancy rates and slower growth in 2027.

A new report from Goldman Sachs Research has revealed that global power demand from data centers is set to surge in the coming years. According to the report, the demand is expected to increase 50% by 2027 and potentially up to 165% by the end of the decade compared to 2023.

The report highlights that large hyperscale cloud providers and corporations are building massive compute clusters to train large language models (LLMs), driving demand for data centers. This is a significant change from the past, when DeepSeek, a Canadian startup, claimed to have developed large-scale AI modeling capabilities using low-end hardware. However, the industry is focused on efficiency and has raised several questions about DeepSeek’s training, infrastructure, and ability to scale.

The report also notes that hyperscale cloud companies, data center operators, and asset managers are deploying large amounts of capital to build new high-capacity data centers. This will lead to a tightening of the balance of data center supply and demand, resulting in increased occupancy rates and slower growth in 2027.

In terms of power usage, Goldman Sachs Research estimates that the global data center market will reach 84 gigawatts by 2027, with AI growing to 27% of the overall market, cloud computing decreasing to 50%, and traditional workloads falling to 23%.

The report also highlights the importance of utility investment in the data center market, with an estimated $720 billion needed to upgrade grid spending through 2030. The pace of public utilities, which can take several years to permit and build transmission projects, may create a bottleneck for data center growth.

Overall, the report suggests that data center supply and demand will continue to evolve in the coming years, with a focus on efficiency, large language models, and increased power usage. As the global demand for data centers grows, it will be crucial for utility companies to invest in upgrading their infrastructure to meet the increasing power needs of the industry.

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