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Microsoft CEO Satya Nadella gestures during a speech at the World Economic Forum (WEF) annual meeting in Davos on January 20, 2026. (Photo: Fabrice COFFRINI/AFP via Getty Images)
Fabrice Coferini | AFP | Getty Images
Microsoft CEO Satya Nadella says energy costs will be key in determining which country wins the race for artificial intelligence.
As countries race to build AI infrastructure to take advantage of the huge efficiency gains the technology will bring, Nadella told the World Economic Forum (WEF) on Tuesday that “GDP growth everywhere will be directly related to the energy costs of using AI.”
He pointed to a new global commodity “token” – a basic processing unit that users of AI models buy to allow them to run tasks.
“The job of every economy and every company in an economy is to convert these tokens into economic growth, so if you have cheaper goods, all the better.”
Hyperscalers like Microsoft Billions of dollars have been spent building data centers to power artificial intelligence.
Microsoft said in early 2025 that it expected $80 billion spent About the construction of artificial intelligence data center. Nadella said 50% of the tech giant’s spending is outside the United States.
“I would say if these tokens don’t improve health outcomes, education outcomes, public sector efficiency and private sector competitiveness across all sectors, we’re going to lose even very quickly the social license to actually take a scarce resource like energy and use it to generate these tokens,” Nadella said.
Europe has one of the world’s highest energy costs, which have continued to rise following Russia’s full-scale invasion of Ukraine in 2022 and subsequent sanctions.
“It’s not just the production side,” Nadella said. “If you think about TCO (total cost of ownership), you think, are you a cheap energy producer? Can you build a data center? What’s the cost curve for silicon in the system?”
How Europe can become competitive
Speaking of Europe, Nadella said the region needs a more global perspective to succeed in the era of artificial intelligence.
“Europe’s competitiveness refers to the competitiveness of its output globally, not just in Europe,” he said. “I think sometimes when you come to Europe there’s a lot of talk about Europe.”
Nadella said the European economy has thrived over the past 300 years because the continent was able to produce what the world needs, adding that to do it again, the continent must invest in the energy and tokens needed to power artificial intelligence in the region.
“Whenever we come to Europe, everyone talks about sovereignty,” he said. “Guess what, Europe should actually be more concerned about access for their industrial companies, their financial services companies… rather than just thinking that by protecting Europe you will be competitive.
“You are only competitive if the products from Europe are globally competitive,” he said. “I think that’s what needs to change.”
