Powering the AI Revolution: Energy Stocks Set to Surge from Data Center Demand

The rise of artificial intelligence is reshaping global infrastructure, and nowhere is this more evident than in the energy sector. As hyperscale data centers proliferate to support AI workloads, the demand for reliable, scalable, and clean energy is exploding. This piece explores the types of energy needed, recent strategic deals, the stocks and ETFs poised to benefit, and defensive picks in case the boom cools.

What Kind of Energy Powers AI Data Centers?

AI data centers are not your average server farms. Training large language models and running inference at scale requires:

• Massive electricity loads: AI data centers may consume up to 4.4% of global electricity by 2035.
• 24/7 reliability: unlike traditional cloud workloads, AI tasks often run continuously, demanding uninterrupted power.
• Low-carbon sources: tech giants are under pressure to meet sustainability goals, favoring nuclear, hydro, and renewables.

Key energy types:

• Nuclear: reliable and carbon-free, gaining favor for powering hyperscale clusters.
• Natural Gas: a flexible bridge fuel, especially where renewables lag.
• Renewables: solar and wind are expanding, but intermittency remains a challenge.
• Battery Storage: emerging as a critical supplement, though not yet fully scalable.

Major Deals and Strategic Moves

The energy sector is already responding to AI’s power appetite:

• Blackstone’s $1.6B acquisition of Shermco Industries: a strategic bet on grid-level electrical services for AI infrastructure.
• GE Vernova’s 4GW gas plant deal with Chevron: designed to power AI data centers, with first units launching in 2027.
• Microsoft’s 437MW renewable energy deal with ReNew Power in India: one of the largest corporate clean energy agreements in India, powering new AI and cloud infrastructure.
• JPMorgan’s upgrade of Argan (AGX): its subsidiary Gemma Power Systems is building scalable power plants for AI clusters.

Stocks and ETFs Poised to Benefit

Here’s a breakdown of companies by category:

ETFs to consider:

• Xtrackers MSCI World Utilities: global utility coverage.
• VanEck Uranium+Nuclear Energy ETF (NLR) : nuclear energy exposure.

Beyond Data Centers: AI’s Broader Energy Appetite

AI’s energy impact extends far beyond physical infrastructure:

• Every AI interaction consumes more power than traditional computing. Whether it’s generating images, running voice assistants, or chatting with Copilot, inference tasks require GPU acceleration and continuous server uptime.
• Cloud workloads are shifting from CPU-based to GPU-based processing, increasing power draw per user.
• Edge AI and IoT are expanding, adding millions of devices that require constant connectivity and processing.

Who benefits from this surge?

These firms are well-positioned to meet rising electricity demand from AI usage across consumer, enterprise, and industrial sectors.

Defensive Picks if AI Data Center Growth Slows

If recession, overcapacity, or regulatory hurdles slow the AI boom, these stocks offer resilience:

• Dominion Energy (D): diversified utility with regulated revenue and renewable exposure.
• Duke Energy (DUK): strong dividend, broad customer base, and infrastructure investments.
• Eaton Corp (ETN): serves multiple sectors including industrial, automotive, and aerospace.

Final Thought

AI is not just a tech story, it’s an energy story. Investors who understand the power behind the processors will be best positioned to ride the next wave of infrastructure growth. Whether you’re bullish on nuclear, utilities, or grid tech, the energy sector is becoming the silent backbone of the AI revolution.