According to a report from Goldman Sachs Research, global power demand from data centers is projected to rise by 50% by 2027 and could increase as much as 165% by 2030, driven largely by the growing needs of artificial intelligence (AI) technologies. The report emphasizes that the industry is prioritizing efficiency rather than relying on emerging technologies like DeepSeek, which has claimed to enable large-scale AI modeling with less powerful hardware.
James Schneider, a senior equity research analyst, highlighted concerns surrounding DeepSeek’s training capabilities and infrastructure. He pointed out that improved efficiency could lower capital expenditure for both existing hyperscalers and new market entrants, potentially reducing the risk of market oversupply in the long term.
Data centers must accommodate the demand from large hyperscale cloud providers and other companies that are developing extensive language models requiring vast computing resources. As a result, significant investments are being funneled into the construction of high-capacity data centers. However, the balance between supply and demand in the data center market is expected to tighten in the upcoming years.
Occupancy rates for data centers are anticipated to grow from approximately 85% in 2023 to over 95% by late 2026. After that point, a moderation is expected as new facilities come online, and the rapid growth of AI usage begins to decelerate.
Currently, Goldman Sachs estimates that the power consumption by global data centers is around 55 gigawatts, distributed as 54% for cloud computing, 32% for traditional workloads, and 14% for AI applications. By 2027, this demand is expected to jump to 84 gigawatts, with AI usage rising to 27% of the total market while cloud and traditional workloads decrease.
The report also noted the existing constraints on data center supply due to delays in utility expansions, supply chain challenges, and the high costs and time involved in upgrading infrastructure. This culminates in the need for an estimated $720 billion in utility investment through 2030 to support the rise in power demand from data centers. However, the slower pace of utility projects remains a significant bottleneck for growth in the data center sector.
For a deeper dive, you can explore the full report from Goldman Sachs here.
