AI Powering Up: How Energy Producers Stand to Gain from Artificial Intelligence Boom
It’s no news that artificial intelligence (AI) is radically changing industries around the world, but there’s one intriguing side effect that often goes unnoticed — a surprising surge in energy consumption in the United States. Yes, you heard that right. The significant energy utilization by data centers, which support a myriad of AI applications, is making the energy meter race like never before.
According to Boston Consulting Group, the trend is expected to continue, projecting a threefold increase in the electricity consumption of US data centers by the end of this decade. If these patterns hold, these data centers could be responsible for a staggering 7.5% of the total electricity consumption in the United States, marking a historical trend reversal.
This AI influx is good news for American energy providers who stand to gain substantially from this boom. For instance, we’re now witnessing Texas-based electricity producer Vistra’s market value surpassing that of AI giant Nvidia. Similarly, Southern Company and Nextera Energy are well-positioned to leverage this escalating demand for power, with Nextera particularly focusing on environmentally friendly energy initiatives.
On a parallel note, the relocation of production facilities to the U.S., spurred by President Joe Biden’s administration, is further contributing to the increased demand for electricity. As a result, companies are becoming more inclined to shell out higher prices for energy — opening the doors for unexpected opportunities for power producers.
One promising prospect is Virginia-based electricity producer AES. According to Morgan Stanley, AES is set to benefit from the AI boom through its collaborations with tech companies, with a forecasted nine percent profit increase and a dividend yield of over three percent.
So could this be a sort of silver lining to the AI surge — providing an unexpected boost to energy producers? It’s too early to tell for certain. But one thing’s clear — the collaboration between AI and power producers will definitely light up conversations for some time to come. And who knows — it might just revitalize your investment portfolio as well. The power is, quite literally, in the industry’s hands.
