AI boom through 2050 hinges on power supply, politics, PwC says

- PwC expects global data center capex will hit $31.6 trillion by 2050 in a base case scenario, with spending accelerating over time - Its forecast – and the lineup of winners and losers – hinges on power and chip availability - Geopolitics and sovereignty regulations could also redraw the map for global data center investments A new PwC forecast says global data center capex could hit anywhere from $22 trillion to $50 trillion by 2050. But the final number – and regional winners and losers – will be determined by a combination of power procurement and politics. PwC’s forecast was based on modeling done by Oxford Economics and assumes a base case of $31.6 trillion in cumulative data center spending through 2050. The U.S. alone is expected to account for $15.1 trillion of that figure. If the base case seems high, that’s because rather than hitting a peak and slowing down, PwC noted spending is actually expected to accelerate through the forecast period. As the firm explained, bringing new data centers online marks the beginning – not the end – of an ongoing AI capex cycle. That’s because most of the spending is not going toward the facility itself but the equipment housed within it, which will need to be replaced every four to six years. “What makes this capex cycle different is that annual spending accelerates over time, rising from roughly $800 billion in 2026 to $1.1 trillion in 2030 to $1.8 trillion in 2050,” PwC wrote. “Every prior infrastructure wave—railways, electrification, the internet—front-loaded construction capex and tailed off as the network matured. This wave inverts the pattern. The data center is essentially a chip-replacement subscription with a building wrapped around it.” But there are a few key factors that will determine exactly when and where those subscriptions kick in. What could impact the data center capex trajectory? PwC highlighted two political maneuvers that could impact the overall capex trajectory as well as regional winners and losers. These include policy-related chip constraints and emphasis on sovereign solutions. And, thanks in large part to the U.S.' massive project pipeline and preponderance of AI technology leaders, the Americas have the most to gain or lose, depending on how the tide turns. “The Americas have the largest absolute uplift if AI accelerates, with cumulative capex through 2050 rising to $27.1 trillion, and the largest absolute shortfall if it doesn’t, reflecting the GPU-intensive composition,” PwC wrote. The rise of sovereignty-first regulations is one of the primary forces that could shape its fortunes – and those of developing countries. While increased emphasis on sovereignty would only shave about $2 trillion off the base case capex scenario, it would significantly alter the regional breakdown of winners and losers. “India, Vietnam, Indonesia, the Philippines, and Thailand all record material uplifts, reflecting large domestic demand bases that have so far been serviced disproportionately from regional hubs,” PwC wrote. The U.S., meanwhile, stands to lose around $2.9 trillion in capex in this scenario as projects are repatriated. Silicon supply chain challenges On the chip front, Circular Technology’s Brad Gastwirth recently noted that while global demand remains strong for technology like Nvidia’s GPUs, questions are already starting to arise around supply. “We continue to believe the important question is shifting away from whether AI infrastructure demand remains strong toward whether the supply chain can expand quickly enough to support it,” he wrote follow Nvidia’s recent earnings call. The role of geopolitics As far as politics goes, a tit-for-tat battle between the U.S. and China has already limited proliferation of the former’s technology in the latter country. If the trade war between the two countries intensifies such that advanced GPUs are harder to get in more markets and raw materials are harder to source along the semiconductor supply chain, the consequences could be dire. “The headline impact is severe in the near term and partially recovers over time. Annual capex falls to roughly half the central scenario by 2030, before recovering as supply chains adapt,” PwC wrote. It added the Middle East and China would be among the most heavily impacted, with the Americas taking the biggest hit in dollars thanks in large part to the U.S.’ GPU-dependent project pipeline. The role of the power supply But more than any politicking, power supply will determine where data center capex is spent, PwC said. “Power sits at the top of the list because affordable, reliable, and increasingly low-carbon electricity at scale is the hardest requirement for many markets to meet—and delivering it quickly is harder still,” PwC wrote. In April, the International Energy Agency updated its data center forecast, predicting electricity consumption in the sector will roughly doubly from 485 TWh in 2025 to 950TWh in 2030. AI data center consumption specifically is expected to grow faster than the sector overall, with electricity usage tripling. Goldman Sachs tipped power demand to grow even faster – jumping 2.7x from 2025 to 2030. Put another way, the data center sector is expected to add “the power equivalent of the whole country of Japan, which is the number five power consuming country” in the seven-year period from 2024 to 2030, Goldman Sachs Research’s Brian Singer said. This skyrocketing power demand is running into a range of deployment constraints, everything from permitting and parts (like transformers and turbines) to people (think skilled workers like electricians) and pricing, Goldman Sachs’ team noted. And in certain markets, the supply-demand equation is already “critically tight,” Goldman’s Carly Davenport said. Put it all together and PwC noted that “The operators that can secure megawatts faster than competitors will capture a disproportionate share of capacity regardless of which path the market takes.” Read more about the data center buildout: Data centers become ‘sleeper issue’ that could decide elections Ban on data center transceiver imports would be ‘terrible,’ analysts say West Virginia joins cadre of states enacting data center development plans About 700 data centers are being built in U.S. as public outcry increases U.S. Anthropic order throws a megaton of fuel on sovereign AI fire