As we advance further into the digital age, the intersection of technology and energy is becoming increasingly pivotal. According to a comprehensive Mizuho Securities report, the rapid expansion of artificial intelligence is set to triple the power demand from data centers by 2030, reaching an astounding 400 terawatt hours annually. This surge will account for approximately 9% of total U.S. electricity demand by the decade’s end.
Currently, the mid-Atlantic region accounts for about 30% of this demand, with Texas following at 13%. This geographical distribution is crucial as it underscores the strategic importance of specific markets within the energy sector.
The growth in energy demand is not just a numbers game but is closely tied to the technology sector’s commitments to climate change, pushing an exponential increase in renewable energy sources. Solar energy, for instance, is expected to see an annual increase of 7 gigawatts, while wind energy could grow by 5 gigawatts each year through 2030. These figures represent potential upsides of 21% and 39%, respectively, over current forecasts.
This backdrop sets the stage for a focused watchlist, spotlighting companies at the nexus of renewable energy and technological innovation, poised to benefit from these transformative trends.
Nextracker (NASDAQ: NEX)
Sun-Powered Growth on the Horizon
Nextracker stands out as a key player poised to capitalize on the increasing solar demands driven by AI and data centers. As the sector eyes a substantial surge in solar and wind energy requirements, Nextracker’s ability to scale production rapidly gives it a significant competitive edge. Currently, with a price target of $59 by Mizuho Securities, the company could see a potential upside due to its robust market share and pivotal role in solar tracking technology.
Array Technologies (NASDAQ: ARRY)
Harnessing Solar Potential Efficiently
Array Technologies is another strong candidate set to benefit from the growing renewable sector. Specializing in solar tracking, Array is well-positioned to meet the escalating demand for solar energy solutions. With a modest price target set at $13 by Mizuho, Array is anticipated to see gains from its essential technology and production capabilities.
First Solar (NASDAQ: FSLR)
A Bright Outlook Amid Policy Uncertainties
First Solar remains a giant in the solar module manufacturing sector but faces a pivotal moment pending the upcoming presidential election. The continuation of the Inflation Reduction Act is crucial for maintaining its competitive stance. Nevertheless, Mizuho suggests a potential $17 increase to its target price of $274, contingent on favorable policy environments.
EQT Corporation (NYSE: EQT)
Fueling the Future with Natural Gas
As renewable sources like solar and wind are set to expand, natural gas is expected to play an essential backup role, especially during dips in renewable production due to weather conditions. EQT Corp., a major gas producer in the U.S., is strategically located to serve the significant data center markets in the mid-Atlantic and Southeast. This positions EQT as a primary beneficiary of the increased gas demand, which could rise significantly if renewable deployment lags.
Constellation Energy (NASDAQ: CEG)
Nuclear Energy: The Powerful Backdrop for AI
Constellation Energy could emerge as a crucial power provider for data centers, leveraging its nuclear energy capabilities. With the potential to forge power agreements directly with data centers, Constellation is uniquely positioned to offer stable, large-scale energy solutions critical for supporting the intensive operations of AI technologies.
This watchlist not only highlights stocks with substantial growth potential due to the AI-driven demand for energy but also underscores the broader shifts in the energy landscape, where renewable integration and reliability are becoming increasingly critical.
