The mainstreaming of cloud and AI will rock the global economy in 2026 as the needs of leading cloud and AI vendors force them to vertically integrate outside the tech sector, and the growth plans of consumer industries require them to incorporate cloud and AI end-to-end.
From Hollywood to the Rust Belt — and there’s a nickname that will soon be obsolete! — and from fashion to the U.S. military, the dynamic power of the cloud and the revolutionary capabilities of AI are driving not only dizzying disruption but also fantastic growth opportunities for businesses willing and able to turn their focus from perfecting their pasts to creating their futures.
One of the most vivid and bracing examples of this new “physical AI” phenomenon is the audacious autonomous-car collaboration between NVIDIA and Mercedes-Benz announced earlier this week at the CES event. Check out the very different world outlined in these excerpts from Nvidia’s launch announcements:
- End-to-end design, manufacturing, and driving: “NVIDIA and Mercedes-Benz are partnering to deliver software-defined vehicles powered by NVIDIA DRIVE AGX — enabling Level 2++ driving today and paving the way to Level 4 autonomy. NVIDIA Omniverse™ digital twins also help Mercedes-Benz optimize vehicle design and manufacturing from factory to road.”
- Beyond Mercedes-Benz to entire industry: “Mercedes-Benz Goes Digital with NVIDIA AI & Omniverse —To drive the automotive industry forward, NVIDIA and Mercedes-Benz are taking the virtual road.”
- Car company or tech company?: “Mercedes-Benz is upleveling its digital ecosystem of production MO360 using NVIDIA Omniverse, libraries and microservices for developing industrial digital twins and physical AI simulation applications.”
While we’ve all likely heard some of these ideas and some of this language swirling around car companies for the past several years, what’s striking to me about this Nvidia/Mercedes-Benz partnership is the scope and immediacy of it. They’re not talking about concept cars or Jetson prototypes that are always decades away — this new partnership will be shipping these “software-defined vehicles” capable of “AI-defined driving” in 2026!
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Here’s Nvidia’s vice-president of automotive Ali Kani on what this disruptive launch means:
“As the automotive industry embraces physical AI, NVIDIA is the intelligence backbone that makes every vehicle programmable, updatable and perpetually improving through data and software. Starting with Mercedes-Benz and its incredible new CLA, we’re celebrating a stunning achievement in safety, design, engineering and AI-powered driving that will turn every car into a living, learning machine.”
Meanwhile, just as traditional businesses are racing to infuse AI into their culture, products, services, and operations, major tech companies are redefining their industrial footprints to meet the needs of a wildly different global economy built around AI and requiring vast increases in energy to power all that innovation.
So, while it’s certainly not surprising to see Alphabet remain active in M&A, I find it striking that Google plans to acquire energy company Intersect, bringing together one of the world’s biggest and most-sophisticated digital natives — Google — with a company out of an industry widely perceived as stuck in the 20th century: energy.
But, while Google and Intercept might have been strange bedfellows in the fairly recent past, their future holds enormous potential for both entities, particularly in helping Google Cloud expand data-center capacity more rapidly and therefore close the gap between booming customer demand and Google Cloud’s ability to keep pace with that demand. Sundar Pichai, CEO of Google Cloud parent Alphabet, offered this overview of what the acquisition means for not only his company and its customers but also for the entire US economy in general and “energy solutions” in particular:
“Intersect will help us expand capacity, operate more nimbly in building new power generation in lockstep with new data center load, and reimagine energy solutions to drive US innovation and leadership,” Pichai said.
Final Thought
Based on additional comments from Alphabet in its announcement of the Intersect deal, we should probably view this not so much as a check-box solution to a pesky problem but rather as the first step in what will surely become a series of moves that will see Google Cloud become more of a player in the energy space:
The acquisition will augment Alphabet and Google’s ongoing commitment to partnering with utilities and energy developers across the sector to unlock abundant, reliable, affordable energy supply that enables the buildout of data center infrastructure without passing on costs to grid customers.
Alphabet is committed to creating new pathways and partnerships to responsibly increase energy supply, while advancing the rapid commercialization of advanced energy technologies — including advanced geothermal, long duration energy storage and gas with carbon capture and storage.
Additionally, Alphabet is deploying AI to accelerate the grid connection of new power plants and helping scale energy efficiency and affordability programs in data center communities.
So welcome, everyone, to the global AI economy, where it looks like 2026 will be an extraordinary year across the globe for innovation, growth, and opportunity!
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