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ABB Confident in Data Center Growth Despite DeepSeek’s Energy-Efficient AI

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ABB CEO Morten Wierod expressed confidence in the continued growth of the data center market, despite concerns over the impact of DeepSeek’s low-energy AI models. Speaking on Thursday after ABB reported its fourth-quarter results, Wierod reassured investors that demand for the company’s electrification products remains strong.

DeepSeek, a Chinese AI startup offering a more energy-efficient alternative to U.S. rivals, caused a selloff in tech stocks earlier in the week after surpassing OpenAI’s ChatGPT in downloads on Apple’s App Store. The AI model’s ability to operate with significantly fewer chips raised fears that it could reduce demand for data center infrastructure, impacting suppliers like ABB. ABB’s stock dropped nearly 6% on Monday amid these concerns.

However, Wierod said discussions with major partners and customers indicated that capital expenditure plans for data centers remain unchanged. ABB has significantly benefited from data center expansion, with its orders in this sector growing by an average of 23% per year between 2019 and 2023. The pace accelerated in 2024, with data center-related revenue now contributing 15% to ABB’s electrification business, up from 12% in 2023 and 8% in 2022.

While Wierod declined to provide a forecast for 2025, he emphasized ABB’s strong positioning in the industry, particularly in China. He also highlighted the company’s role in improving data center energy efficiency, an increasingly important factor as AI computing demand surges. ABB’s motors and variable speed drives can reduce electricity consumption by up to 60%, while its uninterrupted power supply systems operate at 97.4% efficiency when converting electricity.

The company also expects to benefit from the $500 billion AI infrastructure investment announced last week by U.S. President Donald Trump, reinforcing the long-term demand for data center solutions.

“The need for data centers and AI will be very strong in the coming years,” Wierod said. “I have no doubt.”

 

Microsoft to Invest $80 Billion in AI-Enabled Data Centers in Fiscal 2025

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Microsoft plans to invest $80 billion in fiscal 2025 to develop data centers focused on training artificial intelligence (AI) models and deploying AI and cloud-based applications, according to a company blog post. This follows a surge in AI investments, driven by the popularity of AI technologies like OpenAI’s ChatGPT, which require vast computing power.

As AI technologies demand specialized infrastructure, Microsoft is significantly enhancing its data-center network and increasing its investment in AI-focused computing capabilities. The company’s fiscal 2025 capital expenditure, including leases, is projected to total $84.24 billion, with a 5.3% increase to $20 billion in the first quarter of fiscal 2025.

Microsoft’s ongoing investment is seen as crucial to its competitive positioning in the AI race, especially given its exclusive backing of OpenAI. More than half of the $80 billion investment will be allocated to the United States, underscoring the country’s leadership in the global AI landscape.

 

Amazon to Invest $11 Billion in Georgia for AI and Cloud Computing Infrastructure

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Amazon Web Services (AWS), the cloud computing division of Amazon, has announced a significant $11 billion investment in Georgia to enhance its infrastructure and support the growing demand for AI technologies and cloud computing services. This move is part of a broader trend where major tech companies are allocating large sums to develop infrastructure that can accommodate the increasing needs of artificial intelligence.

The investment in Georgia will focus on data centers in Butts and Douglas counties, with Amazon expecting the project to create at least 550 new high-skilled jobs. These centers will support AI-driven innovations and cloud-based applications, which require substantial computing power. The demand for specialized data centers is rising as AI applications, such as machine learning and generative models, rely on clusters of chips to process vast amounts of data.

The growth in AI and cloud services has also led to an increase in electricity consumption in the U.S., as AI data centers consume large amounts of energy. According to an analysis by the Electric Power Research Institute, data centers could account for up to 9% of the total electricity generated in the U.S. by the end of the decade, depending on AI adoption rates. To meet this demand, Amazon has secured power supply agreements with U.S. utilities, including Talen Energy in Pennsylvania and Entergy in Mississippi.

This investment follows similar moves by other tech giants, such as Microsoft’s announcement to invest $80 billion in the development of data centers for AI models and applications. These initiatives underline the critical need for robust infrastructure to sustain the rapid growth of AI technologies.