As we’ve been writing for the better part of the past year, the focus of the next AI trade remains all about energy and ‘powering up America’ through an upgraded grid to ensure AI infrastructure can support power-hungry chatbots.
However, the conversation appears to be shifting as Goldman President of Global Affairs and Co-Head of the Global Institute Jared Cohen published a new article discussing the geopolitics of AI infrastructure and a data center diplomacy strategy.
Cohen penned an article in Foreign Policy titled “The Next AI Debate Is About Geopolitics,” in which he explores the geopolitical importance of AI infrastructure, particularly the global race to establish data centers.
On Monday, Cohen provided clients with an executive summary of the note that explained data might be the “new oil,” but nations – not nature – will determine where data enters are built.
Here’s more:
The United States is home to the plurality of the world’s data centers, yet America’s aging energy grid is under enormous strain. Energy demand in the U.S. has been flat for two decades, data center vacancy rates are near record lows, and the shortage of powered land with the connectivity required to support large-scale data centers, combined with supply chain challenges and lengthy permitting timelines for new infrastructure present challenges to realizing both the public and private sectors’ AI ambitions. Goldman Sachs Research estimates that data centers used three percent of U.S. power in 2022, a number that could reach eight percent by 2030 – estimates by regulatory and industry groups, as well as the International Energy Agency, all point in the same direction.
AI could solve some of these problems, and innovation could improve the U.S.’s domestic outlook. AI could improve grid planning, grid resilience, and materials discovery for clean energy technologies. Increased efficiency of chips, with denser circuits and new architectures are already reducing semiconductor energy needs at remarkable scale. The U.S. produces more oil than any nation in history, and natural gas production has boomed since the shale gas revolution of the early 2000s. A more robust power grid that embraces diverse energy resources—including nuclear power, small modular reactors, and reactivated nuclear plants—could change the market calculations in America’s favor.
But to win, the United States will need to enlist its asymmetric advantage of global alliances and partnerships, both in the public and private sectors. This would be a commercial and public sector strategy for data center diplomacy—proactively identifying able, willing, and trusted international partners; pooling public and private capital; identifying and addressing security and privacy risks; and incentivizing innovation across the technology stack. This task is growing more urgent, and more promising. Leaders need to develop a list of locations that satisfy all or even most of these criteria for data centers.
Key players include:
- Canada: The United States’ top trading partner with vast amounts of powered, networked land close to abundant natural resources and energy. Leading hyperscalers and data center developers have recently announced major projects in Canada totaling tens of billions of dollars, including investments in the energy-rich province of Alberta. A U.S. ally through NATO, the Five Eyes intelligence alliance, and potential future AUKUS technology partnerships.
- The Nordic countries: Leaders in green energy and now all members of NATO. They have exceptional technology companies of their own, including telecommunications giants. Their connectivity, energy sustainability, and access to power have long made them data center hubs for hyperscalers. Their cool climates also help prevent overheating in data centers, potentially allowing better performance levels and lower costs over the long term.
- Japan and South Korea: Home to world-leading technology ecosystems. Tokyo is investing 0.71 percent of its gross domestic product on semiconductors through 2025—a much higher figure than most industrial economies, including the United States.
- The Arab Gulf countries of the Middle East: These countries aim not just to export oil, but also AI. Saudi Arabia and the United Arab Emirates have some of the highest internet penetration rates worldwide. Qatar’s AI market has grown substantially, and Doha has the capacity for significant infrastructure buildouts, as demonstrated by its investments around energy and transportation. The subsea fiber optic cables that are the backbone of the modern internet have critical nodes in the Red Sea and the Persian Gulf, where 90 percent of Europe-Asia data traffic is carried. The region connects Europe to the global south. They are all moving their petrodollars toward investments in the energy transition and domestic industries, from life sciences to telecommunications to manufacturing, and AI will accelerate that trend. The U.S. has a chance to pull these countries closer to its technology ecosystem rather than China’s, but will have to make prudent risk assessments as it does so.
For those who missed it, in our note “The Next AI Trade” from April of this year, we outlined various investment opportunities for powering up America, most of which have dramatically outperformed the market.
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Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
