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Microsoft CEO Satya Nadella said the global AI race will not be decided by software alone. He said energy costs will decide which countries pull ahead and which ones fall behind.
Satya spoke at the World Economic Forum on Tuesday as governments rush to build AI infrastructure to chase productivity gains and economic growth.
He said GDP growth in any country will track closely with the cost of energy used to run AI systems. “GDP growth in any place will be directly correlated to the cost of energy in using AI,” Satya said. Countries that can secure cheap and reliable power will be able to run more AI workloads and do it at a lower cost.
AI tokens drive infrastructure spending and energy demand
At the center of the AI economy is a new commodity called tokens. Tokens are the basic units of processing that users buy when they run AI tasks. These tokens are generated inside large data centers that consume huge amounts of electricity.
“The job of every economy and every firm in the economy is to translate these tokens into economic growth,” Satya said. “If you have a cheaper commodity, it’s better.”
That reality is driving massive spending by hyperscalers. Microsoft is one of them. The company said at the start of 2025 that it expects to spend $80 billion on building AI data centers. Satya said 50% of that spending will happen outside the United States.
The goal is simple. Build capacity where energy, land, and infrastructure allow AI systems to run at scale.
But he warned that access to energy comes with limits.
“We will quickly lose even the social permission to actually take something like energy, which is a scarce resource, and use it to generate these tokens, if these tokens are not improving health outcomes, education outcomes, public sector efficiency, private sector competitiveness across all sectors,” Satya said.
Energy costs also decide the full total cost of ownership of AI systems. “It’s not just the production side,” Satya said. “If you think about the TCO it’s like, are you a cheap producer of energy? Can you build the data centers? What’s the cost curve of the silicon in the system?” Power, buildings, and chips all matter at the same time.
Europe faces high energy costs and global competition
When the conversation turned to Europe, the tone stayed blunt. The region has some of the highest energy prices in the world.
Those prices jumped after Russia’s full-scale invasion of Ukraine in 2022 and the sanctions that followed. That shock is still shaping Europe’s AI outlook.
Satya said Europe needs to think beyond its borders if it wants to stay competitive. “European competitiveness is about the competitiveness of their output globally, not just in Europe,” he said. He added that conversations in the region often focus too much on internal protection instead of global markets.
He pointed to history to make his case. Europe thrived for hundreds of years because it built products the world wanted. To do that again in the AI era, the region needs energy and tokens to power systems locally.
“Whenever we come to Europe, everyone’s talking about sovereignty,” Satya said. “Europe actually should be much more concerned about access to their industrial companies, their financial services companies.”
He said protecting markets alone will not make Europe competitive. Global demand will. “You are only going to be competitive if the products coming out of Europe are globally competitive,” Satya said. “That’s what needs to change.”
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