{"id":234336,"date":"2025-11-13T10:15:00","date_gmt":"2025-11-13T15:15:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=234336"},"modified":"2025-11-14T03:31:25","modified_gmt":"2025-11-14T08:31:25","slug":"america-could-lose-ai-race-against-china-due-to-power-crunch-goldman-says","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/america-could-lose-ai-race-against-china-due-to-power-crunch-goldman-says\/","title":{"rendered":"America Could Lose AI Race Against China Due To Power Crunch, Goldman Says"},"content":{"rendered":"\n<p>The future of artificial intelligence may depend less on chips from&nbsp;<strong>Nvidia Corp.&nbsp;<\/strong><a href=\"https:\/\/www.benzinga.com\/quote\/NVDA\" target=\"_blank\" rel=\"noreferrer noopener\">(NASDAQ:<\/a><a href=\"https:\/\/www.benzinga.com\/quote\/NVDA\" target=\"_blank\" rel=\"noreferrer noopener\">NVDA<\/a>)&nbsp;and&nbsp;<strong>Advanced Micro Devices Inc.<\/strong>&nbsp;<a href=\"https:\/\/www.benzinga.com\/quote\/AMD\" target=\"_blank\" rel=\"noreferrer noopener\">(NASDAQ:<\/a><a href=\"https:\/\/www.benzinga.com\/quote\/AMD\" target=\"_blank\" rel=\"noreferrer noopener\">AMD<\/a>), and more on the raw watts needed&nbsp;<a href=\"https:\/\/www.benzinga.com\/topic\/data-centers\" target=\"_blank\" rel=\"noreferrer noopener\">to power data centers.<\/a><\/p>\n\n\n\n<p>America&#8217;s lead in the global artificial intelligence race is dangerously walking a tightrope, as a looming domestic power shortage threatens to stall progress and open the door for China to seize the upper hand, according to Goldman Sachs.<\/p>\n\n\n\n<p>The bank\u2019s analyst Hongcen Wei indicated the key ingredient to dominating the global AI race is having reliable and ample power supply\u2014something the United States may struggle to maintain.<\/p>\n\n\n\n<p>&#8220;The global AI race is heating up, with fierce competition centered on chips, rare earths access, energy supply, talent, and AI adoption,&#8221; said Wei in a Thursday report.<\/p>\n\n\n\n<p>But what could soon matter most, he said, is electricity.<\/p>\n\n\n\n<p>&#8220;As AI demands massive power, reliable and ample power supply is likely to be a key factor shaping this race, especially because power infrastructure bottlenecks can be slow to solve.&#8221;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-us-data-center-growth-may-hit-a-wall\">US Data Center Growth May Hit A Wall<\/h2>\n\n\n\n<p>Currently, the U.S. leads the world in AI infrastructure, hosting 44% of global data center capacity, equivalent to over 50 gigawatts (GW). That&#8217;s roughly equal to the combined capacity of China, the EU, Japan, South Korea and India.<\/p>\n\n\n\n<p>Data centers already account for 6% of total U.S. electricity demand, and Goldman projects this to rise to 11% by 2030.<\/p>\n\n\n\n<p>But that growing demand is colliding with a strained power grid.<\/p>\n\n\n\n<p>Effective spare power capacity\u2014a key measure of energy system flexibility\u2014has dropped from 26% five years ago to 19% today, nearing the 15% threshold commonly viewed as critically tight.<\/p>\n\n\n\n<p>Eight of 13 U.S. regional power markets have already hit or fallen below that level.<\/p>\n\n\n\n<p>Goldman projects that, even under conservative assumptions, spare capacity in most U.S. regional markets will drop below 15% by 2030, tightening constraints on future data center development. In a scenario where AI infrastructure grows faster\u2014as Goldman&#8217;s equity analysts expect\u2014spare capacity would dip even further below critical levels.<\/p>\n\n\n\n<p>This power bottleneck is already impacting costs.<\/p>\n\n\n\n<p>Real-time electricity prices surged last summer, and capacity prices in PJM\u2014the regional grid that includes Virginia, the global data center capital\u2014jumped sharply.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-china-could-pull-ahead-with-400-gw-in-spare-capacity\">China Could Pull Ahead With 400 GW In Spare Capacity<\/h2>\n\n\n\n<p>While the U.S. grapples with shortages, China is gearing up to meet future AI demands head-on.<\/p>\n\n\n\n<p>&#8220;China\u2014the world&#8217;s second-largest data center hub\u2014already has major power spare capacity and is planning to boost power supply, across renewable, coal, natural gas, and nuclear sources,&#8221; Wei said.<\/p>\n\n\n\n<p>By 2030, Goldman projects, &#8220;China to have effective power spare capacity equivalent to over three times the world&#8217;s expected data center power demand (~400 GW vs. ~120 GW), positioning it to fuel rapid data center expansion.&#8221;<\/p>\n\n\n\n<p>China&#8217;s planned spare capacity would reach 25% of its peak summer demand by 2030.<\/p>\n\n\n\n<p>Given that China&#8217;s power market is already twice the size of the U.S., this provides Beijing with far greater flexibility to fuel AI-related infrastructure, alongside other energy-intensive industries like aluminum production.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-why-the-us-is-falling-behind\">Why The US Is Falling Behind<\/h2>\n\n\n\n<p>Goldman says the U.S. grid is tightening due to three issues: strong demand growth from data centers, insufficient renewable and natural gas capacity to replace retiring coal, and limited deployment of storage and emerging technologies.<\/p>\n\n\n\n<p>These challenges are worsened by long lead times and permitting backlogs for natural gas turbines.<\/p>\n\n\n\n<p>Goldman sees little additional nuclear or gas capacity coming online before 2030, citing construction and supply chain constraints.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-ai-s-future-may-be-powered-by-watts-not-just-chips\">AI&#8217;s Future May Be Powered By Watts, Not Just Chips<\/h2>\n\n\n\n<p>While U.S. policy could boost renewables or delay coal retirements, the bank says those measures are &#8220;unlikely to reverse the tightening trend in the next few years.&#8221;<\/p>\n\n\n\n<p>The AI race is now about more than chips and talent\u2014it&#8217;s about energy. As Goldman put it, &#8220;A key ingredient to win the global AI race is having reliable and ample power supply to feed data centers.&#8221;<\/p>\n\n\n\n<p>And right now, that&#8217;s what China is building\u2014and what the U.S. may soon lack.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted November 13, 2025 &#8211; <a href=\"https:\/\/www.benzinga.com\/markets\/tech\/25\/11\/48832577\/america-data-centers-power-demand-us-ai-race-against-china-nvidia\">America Could Lose AI Race Against China Due To Power Crunch, Goldman Says<\/a><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The future of artificial intelligence may depend less on chips from Nvidia Corp. (NASDAQ:NVDA) and Advanced Micro Devices Inc. (NASDAQ:AMD), and more on the raw watts needed to power data centers.<\/p>\n","protected":false},"author":1128,"featured_media":217664,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18,6,8,9,26,3],"tags":[],"contributors-categories":[13584],"class_list":{"0":"post-234336","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-macro","8":"category-north-america","9":"category-region","10":"category-securities","11":"category-text-articles","12":"category-traders-insight","13":"contributors-categories-benzinga"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>America Could Lose AI Race Against China Due To Power Crunch, Goldman Says<\/title>\n<meta name=\"description\" content=\"The future of artificial intelligence may depend less on chips from Nvidia Corp. 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