Goldman Sachs Commodities Outlook: AI triggers “copper and electricity” shortage crisis, localized power outages and soaring electricity prices may hinder the progress of AI in the United States

The global AI competition is accelerating a structural shortage of "copper and electricity" resources, especially in the United States, where tight electricity markets and limited copper supplies may become key bottlenecks restricting the development of the AI industry.

According to Wind Chasing Trading Desk, Goldman Sachs analyst Daan Struyven's team warned in their latest commodities outlook report for 2026 that the explosive growth of AI data centers in the U.S. is driving a surge in electricity demand. The U.S. electricity market faces further tightening, with risks of significant price increases and even blackouts, which may become a critical bottleneck hindering U.S. progress in the AI race.

The report points out that the AI-driven data center boom has pushed U.S. annualized electricity demand growth close to 3%, surpassing GDP growth. Goldman Sachs estimates that reserve generation capacity in most U.S. regional power markets is at or below critical levels. This tension already caused real-time electricity prices to soar last summer and drove up generation capacity prices in PJM power market regions, including Virginia—which is the global capital of data centers.

Goldman Sachs expects the U.S. electricity market to tighten further in 2026, with increased price volatility and possible power supply interruptions in some regions, impacting data center operations and AI computing capacity expansion. Copper prices will benefit from global electrification and AI infrastructure construction; although there may be some short-term adjustments, the long-term bullish logic remains solid.

U.S. Power Market in Crisis, AI Progress May Be Hindered

With coal power retiring and renewable energy construction unable to fully fill the gap, the U.S. power market is expected to tighten further next year.

Goldman Sachs reports that U.S. data center capacity hit a historic high in November, and data centers are highly geographically concentrated—72% of U.S. data centers are located in counties that account for just 1% of the nation. This concentration increases the strain in local power markets.

Goldman Sachs forecasts that U.S. reserve power capacity will decline further, as rapid demand growth and coal power retirement outweigh the incremental increases from renewables and natural gas. Thus, the U.S. electricity market faces risks of significant price increases and even blackouts, especially in local markets flourishing with data centers.

In contrast, China already has sufficient reserve capacity and is expected to continue growing. Goldman Sachs predicts that by 2028, China's available reserve power capacity will be more than three times the expected global data center electricity demand (about 360 GW compared to about 105 GW). This suggests electricity bottlenecks could hinder the U.S. in the global AI race.

Commodities: Copper Remains Goldman Sachs’s Long-term Top Pick

Goldman Sachs notes that copper is an indispensable raw material for electrification and AI infrastructure, with about half of global copper demand coming from electricity-related sectors, including data centers, renewables, electric vehicles, and grid upgrades.

Since 2025, copper prices have risen on expectations of U.S. refined copper tariffs and falling inventories, and in 2026 are expected to remain high, averaging around $11,400/ton for the year.

The copper supply side faces unique challenges. Global mining cycles are long, and geographical concentration is high, particularly for China, which finds it difficult to quickly expand mining capacity through overseas investment. Goldman Sachs expects global (ex-U.S.) copper inventories to continue to fall in 2026, supporting prices. Although the U.S. is stockpiling copper in anticipation of tariffs, possibly releasing some pressure in the short term, long-term electrification and AI demand will continue to push copper prices higher.

Copper remains Goldman Sachs’s top long-term pick, especially given structural demand growth driven by electrification and unique constraints on supply. Goldman Sachs reiterates its 2035 copper price forecast of $15,000.

In stark contrast to copper are aluminum, lithium, and iron ore. Driven by Chinese overseas investment, supplies of aluminum, lithium, and iron ore will increase significantly in 2026, with prices expected to drop 19%, 25%, and 15% respectively compared to spot.

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