U.S.-Brazil AI cooperation could unlock sustainable infrastructure for data centers at a time when America’s energy constraints threaten its tech ambitions.
The United States’ strategic imperative to excel in artificial intelligence (AI) runs headlong into a critical constraint hiding in plain sight—electricity. The answer might be similarly visible some 3,000 miles south in the bountiful hydroelectric plants of Brazil.
The Energy Gap
As Microsoft, Google, and other tech giants build massive AI data centers nationwide, America’s aging power grid groans at a potentially overwhelming increase in demand. Meanwhile, Brazil has quietly positioned itself as an AI-ready nation powered by clean energy—with 93.6 percent renewable electricity generation and partnerships already forming with American companies and the Chinese government. Good hydrology has recently allowed Brazil to export energy surpluses to neighboring Argentina and Uruguay, demonstrating its regional energy leadership. The United States could face a choice between advancing U.S.-Brazil AI cooperation and risking the loss of influence in a region increasingly courted by global technology powers. Currently, Brazil is listed as a Tier 2 country under the U.S. AI Diffusion framework, which means it can only receive chips under certain conditions.
Brazil’s advantages for AI infrastructure are compelling. The country possesses nearly one-fifth of the world’s water reserves, critical for both hydropower generation (accounting for 80 percent of its electricity) and cooling the server farms that power AI systems. This renewable energy advantage has already attracted significant investment: Microsoft recently committed $2.4 billion for cloud and AI infrastructure in Brazil, while Amazon Web Services is investing $1.8 billion through 2034.
Domestically, Brasilia is investing $3.8 billion through 2028 in AI initiatives spanning education, Amazon deforestation monitoring, and Portuguese language models. But Brazil isn’t putting all its eggs in the American basket—at the 2024 G20 Summit, it signed thirty-seven memorandums of understanding with China, including a joint AI laboratory agreement, and is pursuing semiconductor partnerships that could reshape Western hemispheric technology dynamics.
The contrast between Brazil’s energy outlook and growing U.S. power constraints couldn’t be starker. While Brazil ranks twelfth globally in the Energy Transition Index, large parts of the U.S. power grid present reliability constraints and blackout risks over the next several years despite a potential reopening of coal plants. The situation has pushed tech giants toward creative but costly solutions—Microsoft signed agreements to restart Pennsylvania’s Three Mile Island nuclear plant, and Google partnered with Kairos to construct new nuclear reactors. Brazil’s abundant renewable energy offers an alternative that aligns with tech companies’ climate commitments while relieving pressure on the strained U.S. grid.
An Opening for U.S.-Brazil AI Cooperation
As the United States develops its global AI diplomatic strategy, Brazil must be included alongside other emerging technology powers like Saudi Arabia. First, establishing a bilateral AI innovation hub modeled after Brazilian company Scala’s “AI City” could create a space where American enterprises can offer advanced semiconductor technology in return for Brazilian renewable energy. Second, perhaps most critically, the United States should elevate official diplomatic engagement on AI to match China’s. Brazil, as a Major Non-NATO Ally, deserves more attention than the primarily private-sector partnerships that characterize current U.S. engagement. Such an initiative would require coordinating policy across the Departments of State, Commerce, and Energy but could yield outsized returns.
The strategic calculus for U.S.-Brazil AI cooperation offers clear advantages and risks. If the United States successfully engages with Brazil, U.S. companies will gain access to sustainable computing infrastructure at a time when domestic power constraints threaten innovation timelines. Hyperscalers are already seeking “atypical locations” for data centers due to power availability issues. Brazil’s position as Latin America’s premier innovator makes it a natural regional partner for technological advancement. Conversely, if the United States fails to engage, it risks ceding more influence to China in its own hemisphere, potentially complicating supply chains and creating security concerns as Brazil deepens its semiconductor and AI partnerships with Beijing.
Beyond geopolitics, there’s the practical reality: Brazil’s projected $5.96 billion data center market by 2029 will be built with or without a U.S. partnership—the question is whether the United States will help shape its direction or merely watch from the sidelines.
Marzia Giambertoni is a policy analyst at RAND. Her primary research areas are the role of artificial intelligence in security cooperation, allied space cooperation, nonstate armed networks, and security issues in the Middle East.
Ismael Arciniegas Rueda is a senior economist at RAND, the nonprofit, nonpartisan research institution and a professor of public policy at the Pardee RAND Graduate School. His research and teaching are focused on energy markets.
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