Microsoft CEO Satya Nadella gestures while speaking at the World Economic Forum (WEF) annual meeting in Davos on January 20, 2026 (Photo: Fabrice COFFRINI/AFP via Getty Images)
Fabrice Coffrini | AFP | Getty Images
Microsoft CEO Satya Nadella said energy costs will be key to determining which country wins the AI race.
“GDP growth anywhere is directly correlated to the energy costs of using AI,” Nadella told the World Economic Forum (WEF) on Tuesday, as countries race to build AI infrastructure to take advantage of the massive efficiency gains from AI technology.
He pointed to a new global commodity called “tokens,” the basic units of processing that users of AI models can purchase to perform tasks.
“The job of every economy and every company within an economy is to translate these tokens into economic growth, and the cheaper the product, the better.”
Hyperscalers like Microsoft are spending billions of dollars building data centers to power AI.
Microsoft announced in early 2025 that it expects to spend $80 billion building AI data centers. In total, 50% of the tech giant’s spending is outside the United States, Nadella said.
“If these tokens don’t improve health outcomes, educational outcomes, public sector efficiency, private sector competitiveness across all sectors, then we’re going to quickly lose the social license to even actually take something like energy, which is a scarce resource, and use it to generate tokens,” Nadella said.
Europe has some of the world’s highest energy costs, which rose after Russia’s full-scale invasion of Ukraine in 2022 and subsequent sanctions.
“It’s not just the production side,” Nadella said. “When you think about TCO (total cost of ownership), are you a cheap energy producer? Can you build a data center? What is the cost curve for silicon in your system?”
How can Europe gain competitiveness?
Looking to Europe, Nadella said the region needs to have a more global outlook if it is to succeed in the AI era.
“European competitiveness means the competitiveness of our products, not only within Europe but also around the world,” he said. “I think when you come to Europe, you sometimes have a lot of conversations just about Europe.”
Nadella said Europe’s economy has prospered for the past 300 years because the continent was able to produce what the world needs, adding that to do so again the continent needs to invest in securing the energy and tokens needed to power AI within the region.
“When you come to Europe, everyone talks about sovereignty,” he said. “Why, Europe should actually be more concerned about access to its own industrial and financial services companies, rather than just thinking that protecting Europe will give it a competitive edge.
“We can only be competitive if the products coming out of Europe are globally competitive,” he said. “I think that’s what needs to change.”
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