Big Tech’s Climate Challenge: The Race Against Rising AI Energy Demands
With the year 2025 on the horizon, leading technology companies such as Amazon AMZN, Meta Platforms META, Microsoft MSFT, and Google GOOGL are encountering profound difficulties in reaching their climate goals. This is primarily due to the increasing energy requirements for artificial intelligence (AI) and the growing demand for AI data centers.
These firms have made significant commitments to fight climate change, promising to achieve net-zero carbon emissions by 2040 or sooner. These pledges highlight the tech industry’s recognition of its environmental impact and its ability to effectuate positive change.
The rapid progression of AI technologies, particularly large language models, has resulted in a dramatic rise in energy consumption. Estimates indicate that data centers, responsible for AI operations, will double their electricity usage by 2026. That rise represents a serious hurdle for companies aiming for net-zero emissions by 2030.
While the expansion of AI technology offers new efficiencies and innovations, it also requires vast computational power—contributing to greater energy consumption. This heightened energy demand may hinder the efforts of major tech companies to decrease their carbon footprints.
Challenges Loom for Big Tech’s Climate Commitments
According to a Bloomberg report, Microsoft, Google, and Amazon are struggling with rising energy demands due to AI, which could jeopardize their climate ambitions.
Microsoft and Google have come under scrutiny for their failure to meet climate targets, partly because of the significant energy use tied to their AI operations. This situation illustrates the conflict between rapid technological advancement and environmental stewardship.
Consequently, evaluating how these tech giants are confronting these challenges becomes essential as they work to uphold their climate goals by 2025.
Big Tech’s Path to Sustainability
Amazon – This Zacks Rank #2 (Buy) stock aims to achieve net-zero carbon emissions across all its operations by 2040. The company is on track to power its operations with 100% renewable energy by 2025, bolstered by a $2 billion investment through The Climate Pledge Fund, which focuses on sustainable technologies.
Additionally, Amazon is partnering with Small Modular Reactors for faster energy solutions closer to cities. The goal is to ensure a sustainable energy supply for its growing AI infrastructure.
The Zacks Consensus Estimate for AMZN’s 2024 earnings currently stands at $5.19 per share, reflecting a slight increase over the past 30 days. AMZN shares have climbed 21.2% in the last six months.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
Meta Platforms – This Zacks Rank #3 (Hold) stock, the parent of Facebook, Instagram, and WhatsApp, leverages AI technologies to enhance its platforms and user experiences.
To meet the energy demands for its data centers and AI goals, META is exploring nuclear energy, targeting a reduction in greenhouse gas emissions by 2030. The company plans to release a Request for Proposals for nuclear energy developers to add 1-4 gigawatts of new capacity in the U.S. by early 2030.
The goal is to establish a diverse electric grid that supports sustainable growth for its AI-driven projects. The Zacks Consensus Estimate for META’s 2024 earnings is $22.68 per share, remaining unchanged over the previous 30 days. META shares have risen 17.3% in the past six months.
Meta Platforms, Inc. Price and Consensus
Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote
Microsoft – A Zacks Rank #3 stock, Microsoft is at the forefront of AI development with innovations in speech recognition, translation, and natural language understanding.
The company is committed to becoming carbon-negative by 2030 and aims for 100% renewable energy by 2025. Notably, Microsoft has invested $10 billion in a partnership with Brookfield Renewable Partners to develop 10.5 gigawatts of renewable energy.
The Zacks Consensus Estimate for Microsoft’s fiscal 2025 earnings is steady at $12.93 per share over the past month. However, MSFT shares have seen a 2.5% decline in the last six months.
Microsoft Corporation Price and Consensus
Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote
Alphabet – Holding a Zacks Rank #3, Alphabet, the parent company of Google, aims to operate on 24/7 carbon-free energy by 2030 while reducing its overall carbon footprint through the use of recycled materials in its products.
Alphabet is also pursuing nuclear power solutions to enhance its AI capabilities, aiming for over 5,000 megawatts of power by the end of the decade. Despite these advancements, the rising energy demands of AI technology present ongoing challenges for their sustainability efforts.
The Zacks Consensus Estimate for Alphabet’s 2024 earnings has remained stable at $8.02 per share over the last 30 days. GOOGL shares have appreciated 6.8% during the last six months.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Conclusion
Although major tech companies work diligently to meet their climate pledges, the challenges are expected to escalate by 2025. Nonetheless, their initiatives to incorporate nuclear and renewable energy sources represent promising steps towards a sustainable future and a healthier planet.
Research Chief Names “Single Best Pick to Double”
From thousands of stocks, five Zacks experts have identified their favorite contender for a potential +100% surge in the coming months. Among these, Director of Research Sheraz Mian selects one stock that he believes carries the greatest upside.
This company is primed to captivate millennial and Gen Z markets, having generated nearly $1 billion in revenue last quarter. A recent stock price dip provides an excellent buying opportunity. While not every recommendation yields returns, this one may outperform previous Zacks selections like Nano-X Imaging, which soared +129.6% in under nine months.
Want to see Zacks’ top stock and four alternatives? Access the latest recommendations from Zacks Investment Research. Download the report on five stocks set to double.
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
To read this article on Zacks.com, click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
