Microsoft CEO Satya Nadella has identified energy costs as the pivotal factor in determining which nation will emerge victorious in the global race to dominate artificial intelligence. Speaking at the World Economic Forum in Davos, Nadella emphasized that a nation’s gross domestic product (GDP) growth will be directly tied to the affordability of energy required to power AI technologies.
He introduced the concept of “tokens” as a new global commodity. These tokens represent the fundamental units of processing power that users purchase to operate AI models and execute tasks. Nadella stated, “The mandate for every economy and every firm within it is to convert these tokens into economic expansion. Naturally, a lower commodity price leads to better outcomes.”
Leading technology firms, often referred to as hyperscalers, are making substantial investments in building data centers to support the burgeoning demand for AI. Microsoft, for instance, announced at the beginning of 2025 its intention to allocate $80 billion towards the construction of AI data centers. Nadella revealed that half of this significant investment is earmarked for projects outside the United States, underscoring a global expansion strategy.
Nadella also articulated a condition for the continued societal acceptance of such energy-intensive initiatives. He stated, “We will quickly lose the social license to utilize a scarce resource like energy to generate these tokens if they do not demonstrably improve health outcomes, educational attainment, public sector efficiency, and the competitiveness of private sector enterprises across all industries.”
The cost of energy in Europe is already among the highest globally, a situation exacerbated by geopolitical events. Nadella elaborated on the total cost of ownership (TCO) for AI infrastructure, highlighting that competitive advantage hinges on being a low-cost energy producer, having the capability to construct data centers, and managing the cost dynamics of the silicon components within the system.
**Europe’s Path to AI Competitiveness**
Addressing Europe’s position in the AI landscape, Nadella urged the region to adopt a more expansive global perspective to thrive. He posited, “European competitiveness is defined by the global competitiveness of its output, not solely its performance within Europe. It seems that when engaging with Europe, there’s often a pronounced focus on European matters alone.”
Nadella reminded attendees that Europe’s economic prosperity over the past three centuries was built on its ability to produce goods and services in demand worldwide. To recapture this leadership in the AI era, he asserted, the continent must invest in securing the necessary energy resources and the “tokens” required to power AI innovation domestically.
He observed a prevailing narrative of “sovereignty” in European discussions. “What’s essential is that Europe should be far more concerned with ensuring access for its industrial and financial services companies,” Nadella suggested. “This is in contrast to the belief that simply protecting Europe will inherently lead to competitiveness.”
“True competitiveness,” he concluded, “will only be achieved if the products originating from Europe are competitive on a global scale. I believe this is the fundamental shift that needs to occur.”
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