AI vs Energy: Which Theme Could Dominate the Next Decade?

Synopsis: The AI boom is driving a surge in electricity demand unlike anything we’ve seen, making the energy infrastructure underpinning AI as important as the AI itself. The backbone of AI growth is now power generation, grids, cooling and transmission, and the biggest investment opportunity of the next decade might be the intersection of AI and energy. We discuss these topics here.

While the AI boom has been the reigning theme of the market for the last couple of years, a new investment theme is quietly rising to be just as important: energy. As AI models become increasingly powerful and electricity-hungry, the future of the industry will depend on power generation and grid infrastructure. Here, we’ll discuss why AI and energy are no longer separate investment stories, how increasing electricity demand is transforming capital deployment, and why the biggest winners of the next decade could be the companies that are powering the AI revolution, not building it. 

The Power Problem Nobody Saw Coming

Here’s the thing about AI that doesn’t get enough attention: it is absolutely ravenous when it comes to electricity. A typical AI-focused data centre consumes as much electricity as 100,000 households. And the largest ones under construction today will consume 20 times that. That’s not a rounding error, that’s a civilizational-scale energy problem. 

Electricity demand from AI-focused data centres surged 50% in 2025 alone, driven by the explosive growth of video generation, AI reasoning, and autonomous agentic systems. And this is just the beginning. The IEA estimates that global electricity demand from data centres will nearly double  from 485 TWh in 2025 to 950 TWh by 2030, equivalent to roughly 3% of total global electricity demand. So while everyone was debating which AI model would win the intelligence race, a quieter race was breaking out in the background: the race for power.

The Money Has Already Moved

The capital markets figured this out before most investors did. By 2026, power availability has overtaken chip supply as the dominant constraint on AI expansion. The energy sector is repricing to reflect its role as essential AI infrastructure  not just utilities. 

Large technology companies are likely to commit more than $1 trillion of spending in just the 2025–2026 period. But here’s the twist  a significant portion of that isn’t going into algorithms or models. It’s going into power grids, cooling systems, and physical infrastructure. The Big Four hyperscalers  Meta, Alphabet, Amazon, and Microsoft  are projected to spend over $650 billion on capital expenditures in 2026, extending well beyond chips into power grids and cooling systems.  Spending by just five tech companies now exceeds total global investment in oil and gas production. Let that sink in.

What’s Being Built Right Now

The buildout is happening across multiple energy sources simultaneously, and it doesn’t follow a neat green-energy-only script. Renewables and natural gas are taking the lead in meeting data centre electricity demand. Half of the global growth in data centre demand is expected to be met by renewables, supported by storage. Natural gas is also expanding meaningfully, notably in the United States  and nuclear is contributing a similar amount, particularly in China, Japan, and the US.

Nuclear, in particular, is having a genuine moment. Small Modular Reactors are being explored by multiple tech giants looking for reliable, carbon-free baseload power. Geothermal is quietly gaining traction too; geothermal saw $1.7 billion invested in Q1 2025 alone, with companies like Fervo Energy backed by major technology firms as examples of utility-scale development. 

BlackRock estimates that approximately 148 GW of additional power capacity will be needed by the end of the decade just to satisfy data centre demand multiples above the roughly 42 GW consumed by data centres in 2025.

So AI or Energy? Wrong Question

The truth is that the two themes have merged into one. You cannot have AI without energy, and AI demand is increasingly shaping energy. By 2026, AI infrastructure and the energy supercycle will become one investment theme. The market has moved on from thinking of AI as a story that is driven primarily by software or chips. The question now is whether companies can find enough power, cooling and physical capacity to turn AI demand into sustainable revenues. 

That reframes the entire decade’s opportunity. The companies that will win aren’t necessarily the ones with the flashiest models  they’re the ones that control the pipes, the grids, the transformers, and the transmission lines that make AI physically possible.

By 2030, AI could account for up to 9% of all US energy consumption, up from 4% in 2023  and that demand is a primary driver of the planned $1.4 trillion in grid investments by US utility companies over the next five years. 

The Takeaway

If the last decade was about betting on the software layer of AI, the next one is about betting on the physical layer. Power generation, grid infrastructure, cooling technology, and nuclear energy aren’t just energy stories anymore; they are AI stories.

Ask which theme wins the decade, and you’re asking the wrong question. AI needs energy to exist. Energy needs AI investment to grow. They stopped being separate trades a while ago. The investors who figured that out early are already positioned.

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