December 23, 2024

Will Big Tech Remain Committed to Their Climate Goals in 2025?

business people have a meeting about company statistics

As 2025 approaches, big technology (big tech) companies, Amazon AMZN, Meta Platform META, Microsoft MSFT and Google GOOGL, are facing significant challenges in meeting their climate goals due to the escalating energy demands for deploying artificial intelligence (AI) and the accelerating demand for AI data centers.

These companies have committed to combating climate change, pledging to achieve net-zero carbon emissions by 2040 or earlier. These ambitious goals reflect a growing recognition of the tech industry’s substantial environmental impact and potential to drive positive change.

However, the rapid advancement of AI technologies, particularly large language models, has led to a surge in energy consumption. Data centers, which power AI operations, are projected to double their electricity usage by 2026, posing a significant challenge for companies aiming to achieve net-zero emissions by 2030.

The proliferation of AI technologies presents both benefits and challenges. While AI offers opportunities for efficiency and innovation, it also demands significant computational power, leading to increased energy consumption. This surge in energy use could undermine big technology companies’ efforts to reduce their carbon footprints.

Big Tech Facing Hardship Meeting Climate Goals

A Bloomberg report highlighted that Microsoft, Google, and Amazon are grappling with growing energy demands from AI, potentially jeopardizing their climate objectives.

Microsoft and Google have faced scrutiny for not meeting their climate goals, partly due to the energy demands of AI operations. This situation underscores the tension between technological advancement and environmental responsibility.

In this context, it’s crucial to examine how individual big tech companies are addressing these challenges and whether they can remain committed to their climate goals in 2025.

Big Tech’s Commitment to Sustainability

Amazon - This Zacks Rank #2 (Buy) stock has pledged to achieve net-zero carbon emissions across its operations by 2040. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

The company has invested in renewable energy and is working to power its operations with 100% renewable energy by 2025. Amazon has invested $2 billion through The Climate Pledge Fund to support the development of sustainable technologies.

Amazon has also entered into agreements with Small Modular Reactors, which promise faster build times and can be deployed closer to the grid. These advancements are aimed at bolstering Amazon’s AI infrastructure and ensuring that the energy needs of its growing operations can be met sustainably.

The Zacks Consensus Estimate for AMZN’s 2024 earnings is currently pegged at $5.19 per share, which has increased by a couple of pennies over the past 30 days. AMZN shares have gained 21.2% over the past six months.

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

Meta Platform - This Zacks Rank #3 (Hold) stock, the parent company of Facebook, Instagram and WhatsApp, uses AI-driven technologies to improve its platforms, upgrade user experience and build new services.

With its data centers powering these services, META is adopting nuclear energy to meet its growing energy needs and further its AI goals. It has set goals to reduce greenhouse gas emissions by 2030 and has invested in renewable energy projects to support its data centers.

Meta Platforms recently announced its plan to release a Request for Proposals to identify nuclear energy developers capable of adding 1-4 gigawatts of new nuclear generation capacity in the United States starting in early 2030. By partnering with developers to build nuclear power plants, META aims to have a diversified electric grid to support its data centers and continue its AI-driven innovations while contributing to a sustainable energy future.

The Zacks Consensus Estimate for the company’s 2024 earnings is pegged at $22.68 per share, which has remained unchanged in the past 30 days. META shares have gained 17.3% over the past six months.

Meta Platforms, Inc. Price and Consensus

Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote

Microsoft – This Zacks Rank #3 stock has been at the frontline of AI development, pioneering advancements in conversational speech recognition, machine translation and natural language understanding. Its AI models, like Turing and Azure, have set new standards in the industry.

The stock aims to be carbon-negative by 2030 and has increased its renewable energy ambition to 100% by 2025. The company has also invested in renewable energy projects, including a $10 billion deal with Brookfield Renewable Partners to develop 10.5 gigawatts of renewable energy.

The Zacks Consensus Estimate for the company’s fiscal 2025 earnings has been steady at $12.93 per share over the past 30 days. MSFT shares have lost 2.5% over the past six months.

Microsoft Corporation Price and Consensus

Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote

Alphabet - This Zacks Rank #3 stock, and the parent company of Google has committed to operating on 24/7 carbon-free energy by 2030. The company has made strides in reducing its carbon footprint, including using recycled or renewable materials in its hardware products.

Alphabet has also entered into agreements to utilize nuclear power to support its AI ambitions, aiming to provide more than 5,000 megawatts of power by the end of the next decade. However, the increasing energy demands of AI technologies present challenges to maintaining and advancing these sustainability efforts.

The Zacks Consensus Estimate for the company’s 2024 earnings has been steady at $8.02 per share over the past 30 days. GOOGL shares have risen 6.8% over the past six months.

Alphabet Inc. Price and Consensus

Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote

Conclusion

Although big tech companies strive to maintain their climate pledges, the road to achieving those promises is expected to get tougher in 2025. Nevertheless, plans to use nuclear and renewable energy sources bode well for the industry’s prospects and a healthier earth.

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