The Goldman Institute proposes 'data center diplomacy' to aid the U.S. in its global AI competition.

• As the AI race intensifies, Jared Cohen from the Goldman Sachs Institute advises the U.S. to outsource its data center capacity and carefully select its global partners.
• AI data center infrastructure and development will receive approximately $600 billion in funding from Big Tech companies.
• According to Cohen, the future of AI infrastructure will be determined by nations, not nature, as data has become the new oil.

The location of data centers globally could have lasting geopolitical impacts for the U.S., according to the head of policy.

Jared Cohen, the ex-CEO of Jigsaw and current co-head of the Goldman Sachs Global Institute, likens the current momentum in AI to the next Industrial Revolution in a new op-ed in Foreign Policy. He suggests that "data center diplomacy" presents an opportunity in this technology wave.

"Cohen stated in an interview with CNBC that the development of this technology is comparable to the creation of the internet, but it has occurred much more rapidly. He emphasized that data is the new oil and the future of AI infrastructure will be determined by nations, not nature."

The construction of data centers and the allocation of $600 billion by mega-cap tech companies like Google, Amazon, and Microsoft in the next three years, as reported by Goldman, is crucial for AI's training.

Despite a slowing economy, China is investing in AI data centers and has launched a $6.1 billion national initiative called "Eastern Data, Western Computing." Meanwhile, the U.S. has its own slate of initiatives, including a task force on AI infrastructure.

The U.S. and China are the two countries with the financial resources to invest in AI, and Cohen predicts that while the U.S. currently leads in AI development, the buildout of data centers may become a "bottleneck," requiring the U.S. to consider alternative options to meet demand.

The U.S. has already formed partnerships with countries such as Canada, Australia, and France. However, Cohen refers to "geopolitical swing states," or countries with a significant amount of capital, a willingness to deploy it globally, and a higher likelihood of shifting towards China as another option. The Middle East is recognized as a crucial partner by Cohen.

Sovereign funds in the Middle Eastern Gulf states, with roughly $11.3 trillion in management, have become major backers of capital-intensive AI businesses, including OpenAI and Anthropic.

According to Cohen, countries such as the United Arab Emirates, Qatar, and Saudi Arabia may be in the best position to quickly expand their data center capacity.

"The Gulf countries in the Middle East offer numerous opportunities for AI data centers due to their young, ambitious leaders who aim to export more than just oil. As a prominent official from the United Arab Emirates stated, 'We missed the first industrial revolution, but we are not missing the AI revolution.'"

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