Goldman Institute calls for ‘data center diplomacy’ as U.S. competes in global AI race

Data centers are a key piece of artificial intelligence infrastructure. Where they pop up around the globe could have lasting geopolitical impacts for the U.S., says Goldman Sachs' head of policy.

Jared Cohen, the former CEO of Google's Jigsaw and now co-head of the Goldman Sachs Global Institute, compares the momentum in AI to the next Industrial Revolution in a new op-ed this week in Foreign Policy. In this technology wave, the opportunity exists for "data center diplomacy," he wrote.

"This is a technology that is on par with the creation of the internet, except it's happened much more abruptly," Cohen told CNBC in an interview. "Data may be the new oil, and it's ultimately nations, not nature, that's going to determine the future of AI infrastructure built."

AI relies on massive amounts of data for training and gigantic data centers. Mega-cap tech companies like Google, Amazon, Microsoft and Meta are spending heavily to build the infrastructure, and plan to shell out roughly $600 billion on those efforts in the next three years, according to Goldman.

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

Countries that have money to spend face a "binary" choice for investing in AI: The U.S., or China. Cohen says that while the U.S. is still ahead in AI, data center buildout become a "bottleneck," and the "U.S. is going to have to have some sort of overflow option to meet demand."

The U.S. has already partnered with countries including Canada, Australia and France. But the other option is what