Tackling AI in Texas

We're closely following the issue of AI and emerging technologies and how the State of Texas is considering them, from the standpoint of policies and regulations, to their uses by public and private actors in Texas, to their integration into state agencies, the risks and benefits of AI and emerging technologies, plus how things like ethics, data privacy and cybersecurity factor in. We want to keep you updated on this fast-moving and complex issue, which is why we’ve created this newsletter – Tackling AI in Texas.

Below you’ll find info on the news driving the day on AI in Texas, plus recaps of events we attended and info on upcoming events we've got on our calendars.

1. ?? AI is coming… but maybe not for your job

AI is increasingly becoming integral in Texas businesses, with nearly 40% already using it and 16% planning to adopt it soon, according to the Dallas Fed’s Texas Business Outlook Surveys.

Why it matters: AI’s adoption is transforming industries, especially in large firms, where it’s used for generative tasks, enhancing productivity and competitiveness. However, it is important to note that most companies using AI report it has not affected their need for workers.

• Compared to large businesses, small businesses face challenges in implementation due to resource constraints.
• This growth in AI use could influence economic policies and workforce dynamics, prompting a reevaluation of job roles and skills.

The big picture: The significant uptake in AI highlights its potential in driving economic growth and innovation. Industries like healthcare are poised for substantial AI integration, with a higher adoption rate expected in the coming months. This trend reflects a broader shift towards digital transformation, impacting sectors differently based on their size and capability to adapt.

By the numbers: Of the surveyed 363 Texas business executives the Federal Reserve Bank of Dallas looked at, nearly 40% use AI, and about half of these utilize generative AI.

• Overall, large firms are more likely to implement AI.
• 50% of healthcare firms plan AI adoption in the next year.

What’s next: As AI adoption continues to grow, businesses must address concerns like misinformation and privacy. The impact on employment and productivity will evolve, requiring a focus on skills adaptation and policy development. This necessitates proactive engagement with policymakers to ensure that AI serves as a tool for progress rather than a disruption.

2. ?? Google looks to nuclear to power data centers

Google’s CEO, Sundar Pichai, confirmed Google is exploring large-scale data centers using over 1 GW of power, potentially powered by small modular nuclear reactors (SMRs).

• Pichai did not say Google would use SMRs to power its data centers, but noted, “I see the amount of money going into SMRs … for nuclear energy. And so when I look at the capital and innovation going in, I’m optimistic in the medium to long term.”

Why it matters: The growing energy demand from tech giants like Google and Microsoft, driven by AI expansion, poses significant challenges for sustainable energy production. Their commitments to carbon neutrality and exploration of advanced energy sources like small modular nuclear reactors and geothermal energy could set industry standards and influence broader energy policies. This shift towards cleaner energy solutions not only addresses climate change but also stimulates innovation, investment, and infrastructure development, shaping both economic growth and geopolitical dynamics.

Go deeper: As Google aims to be carbon-neutral by 2030, the growing energy demands of AI-driven data centers pose a significant challenge. Google has historically invested in wind and solar energy and is exploring other carbon-free options, including geothermal energy for a Nevada data center, part of Google’s plan with Nevada’s NV Energy to purchase geothermal energy from a power plant operated by Fervo Energy.

• Google is forming a team to explore carbon-free energy options, including SMRs and geothermal energy, to meet its global power needs.

Industry Trends: Other tech companies, like Oracle and Microsoft, are also expanding data centers. Oracle plans to invest over $10 billion in a data center build out with the hope of having “hundreds of data centers,” with at least one “in every country in the world,” according to Larry Ellison, CEO and founder of Oracle.

• Additionally, Microsoft recently announced its efforts to address the high energy demands of AI data centers by partnering with Constellation Energy to reopen the shuttered Three Mile Island Unit 1.

What they’re saying: “I see the amount of money going into SMRs … for nuclear energy. And so when I look at the capital and innovation going in, I’m optimistic in the medium to long term.” Sundar Pichai, CEO of Google and Alphabet.

3. ?? X-energy and Amazon become latest nuclear + data collab

Another collab between advanced nuclear and big data was announced today, with Amazon and X-energy making public their collaboration.

The details: X-energy announced a Series C-1 financing round of approximately $500 million, anchored by Amazon, to fund the completion of X-energy's reactor design and licensing as well as the first phase of its TRISO-X fuel fabrication facility in Oak Ridge, Tennessee, and to support future projects that will use X-energy’s Xe-100 advanced SMRs.

• The duo also announced a collab to bring more than 5 gigawatts of new power projects online across the United States by 2039, representing the largest commercial deployment target of SMRs to date.
• The efforts will help power Amazon operations, as well as establish and standardize a deployment and financing model to develop projects in partnership with infrastructure and utility partners.

Why it matters: Amazon and X-energy join Constellation and Microsoft, Google and Kairos, Oracle - and more - reflects a broader industry trend where tech companies are increasingly turning to nuclear power to satisfy the rising energy demands fueled by AI and cloud computing advancements.

What they’re saying:

• “Amazon and X-energy are poised to define the future of advanced nuclear energy in the commercial marketplace. To fully realize the opportunities available through artificial intelligence, we must bring clean, safe, and reliable electrons onto the grid with proven technologies that can scale and grow with demand. We deeply appreciate our earliest funders and collaborators, notably the U.S. Department of Energy and Dow Inc. With Amazon, Ken Griffin, and our other strategic investors, we are now uniquely suited to deliver on this transformative vision for the future of energy and tech.” - X-energy CEO J. Clay Sell.
• “This collaboration between Amazon and X-energy is a significant step toward accelerating advanced nuclear technologies that can help us bring new sources of carbon-free energy to the grid cost-effectively and safely. We need smart solutions that can help us meet growing energy demands while also addressing climate change. X-energy’s technology will be integral in helping achieve this, and is an important step in Amazon’s work to achieve our Climate Pledge commitment to be net-zero by 2040.” - Kevin Miller, Amazon’s Vice President of Global Data Centers.
• “Nuclear is an important source of clean and reliable power that our nation needs to meet the growing demand for energy. X-energy provides an impactful solution to a critical challenge – and the support Amazon, Dow, and other major corporations have provided underscores its potential and merit.” - Ken Griffin, Founder and CEO of Citadel, whose affiliate is one of the lead investors in this round.

?? On our calendars…

• Join the Texas Higher Education Coordinating Board (THECB) Wednesday, October 30, 3:00 – 4:00 PM CDT for their “Become an AI Wizard: Unlock Generative Power for Content Creation and Student Engagement” event. More information can be found here.