Core Insights - The report from Morgan Stanley highlights that AI is not only a significant consumer of electricity but also a major "water hog," with water resource limitations posing a serious threat to AI expansion [2][3]. Group 1: Water Resource Challenges - AI data centers are increasingly dependent on physical resources, with the water consumption for cooling and chip manufacturing becoming a critical issue [3][5]. - The water consumption required to maintain large AI models is equivalent to the annual water usage of several medium-sized cities [4]. - The real bottleneck is not the total water consumption but the localized availability of water, which can halt data center projects if local authorities deny water access [6]. Group 2: Technological Adaptations - Tech giants are being forced to innovate to survive in a water-scarce environment, focusing on technologies that significantly reduce Water Usage Efficiency (WUE) [7]. - Regulatory bodies are tightening standards, with regions like Singapore and Malaysia aiming to limit WUE to 2.0 m³/MWh within ten years [8], and the EU planning mandatory minimum water performance standards for data centers by the end of 2026 [9]. Group 3: Future Water Consumption Projections - By 2028, the direct cooling and electricity production for AI data centers are projected to consume 106.8 billion liters of water, with potential increases to 148.5 billion liters under optimistic demand scenarios [11]. - Even in pessimistic scenarios, water consumption is expected to reach 63.7 billion liters [11]. Group 4: Market Opportunities - Companies specializing in water treatment technologies, such as Ecolab, Toray Industries, Veolia, and DuPont, are likely to benefit from the increasing demand for water recycling and desalination solutions as data center operators strive for water resource sustainability [12][13]. - The market logic indicates a structural growth in demand for water management solutions as large-scale data center operators aim to achieve "water positive" goals by 2030 [13].