move AI workloads from cloud to reduce power consumption

Arm Holdings CEO Rene Haas told CNBC’s Jim Cramer on Wednesday that moving some AI functions away from the could help reduce energy usage.

Over time, he suggested, a large number of multi-gigawatt data centers won’t be sustainable.

“You look to yourself, well, what are the kind of things that need to happen? I think there’s two vectors to it,” Haas said. “One is low power, the lowest power solution you can get in the cloud. Arm really contributes there. But I think even more specifically is moving those AI workloads away from the cloud to local applications.”

While he said AI training will likely always happen in the cloud, running AI, called inference, can happen locally — meaning on the chips inside people’s phones, computers and glasses. History has shown “we always go to hybrid models around computing,” according to Haas.

He suggested that hybrid dynamic will play out when it comes to AI, which will help alleviate huge power investments.

Chip designer Arm’s technology powers devices made by a number of major Big Tech players, including Microsoft and Amazon. Semiconductor giant Nvidia has a major stake in Arm and actually attempted to acquire the company in 2020.

Arm and Meta on Wednesday said they would expand their partnership to “scale AI efficiency across every layer of compute – spanning AI software and data center infrastructure,” according to a press release. Arm stock saw gains following the announcement, finishing the day up 1.49%.

Haas told Cramer that the partnership with Meta is “largely around data centers, but more broadly…around software and the software stacks associated with it.” He also discussed Arm’s involvement in Meta’s new Ray-Ban Wayfarer glasses, saying the AI for the technology is running both in the cloud and locally.

“For example, when you say, ‘hey, Meta,’ into those glasses, that’s not happening on the cloud, that’s actually happening in your glasses, and that’s running on Arm,” Haas said.

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Disclaimer The CNBC Investing Club Charitable Trust owns shares of Meta, Microsoft, Amazon and Nvidia.