Artificial intelligence requires a shocking amount of energy, creating substantial opportunities for energy stocks to buy fueled by the unstoppable AI boom and the Nvidia-driven surge.
For an idea of how much power we’re talking about, consider this.
According to The Verge, by 2027, the AI market alone could consume between 85 and 135 terawatt hours every year. That’s nearly the same amount of power that runs the Netherlands in a single year.
“You’re talking about AI electricity consumption potentially being half a percent of global electricity consumption by 2027,” added Alex de Vries, a doctoral candidate at VU Amsterdam, as quoted by The Verge. “I think that’s a pretty significant number.”
And, as noted by GlobalXETFs.com, “Connor Teskey, CEO of Brookfield Renewable Partners, stated that the market is only just starting to understand the amount of power needed for the adoption of AI, and that ‘sourcing sustainable renewable power at scale is now on the critical path to delivering the rollout of AI globally.’”
We’re talking about unbelievable energy demand — which could help fuel big upside for energy stocks to buy, including:
First Solar (FSLR)
One of the top energy stocks to buy is First Solar (NASDAQ:FSLR), which I mentioned as an opportunity on May 14, as it traded at about $190.
At the time, I said, “Goldman Sachs likes it, noting the company is poised for growth with improving demand, especially with explosive data center electricity demand.” Today, FSLR is up to $273.45 and could blast even higher on the AI story.
Since then, UBS analysts initiated a “buy” rating, with a price target of $170. The firm added that FSLR is an “overlooked, direct beneficiary” of the AI story. Even Piper Sandler just raised its price target on FSLR to $210 with an overweight rating.
At the moment, FSLR is consolidating at $273.45. From here, I’d like to see it run to at least $300 initially. All as the AI story just starts to heat up.
Enbridge (ENB)
Another hot energy stock running on the AI, Nvidia-driven surge is Enbridge (NYSE:ENB).
Last trading at $36.19, it’s just starting to bounce after finding support at around $35.75. From its last traded price, I’d like to see ENB closer to $45 a share. Better, while we wait for that to potentially happen, we can collect its current yield of 7.39%.
Better, as noted by company CEO Greg Ebel:
“The build out of data centers and generative AI is forecasted to require a material increase in power generation. This new power generation will be fed by a combination of natural gas and renewables and supports our view that the world needs all forms of energy. As the sector evolves, Enbridge is well positioned to serve this increased demand.”
Analysts say demand from data centers alone could double or triple.
“Analysts believe that demand from data centers in particular could double or triple in the next five years, putting stress on the transmission grid. Some utilities say they will need more natural-gas power plants to supply the necessary electricity, and that could increase demand for pipelines to send that gas to the plants,” added Barron’s.
Williams Cos. (WMB)
Energy infrastructure company, Williams Cos. (NYSE:WMB) is powering to higher highs, too. Since bottoming out at around $32 in February, the WMB stock is up to $41.42. But this may just be the start of a bigger move thanks to the AI, Nvidia-driven surge.
According to Williams’ CEO Alan Armstrong, natural gas will be critical to meeting surging demand for data centers.
“Electricity demand is experiencing three times faster growth per year this decade than what we’ve seen in previous decades, driven by the increase in electric vehicles and emergence of new, large-load data centers,” he added. “This is a major shift for our country, and it’s a major shift for the natural gas market to be able to keep up with this. We are projecting that data center loads will be up to 30 gigawatts by 2030.”
Again, all thanks to an unstoppable AI, Nvidia-driven surge.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
