It’s time to put aside your obsession with Nvidia (NVDA) for a while.
Morgan Stanley said that artificial intelligence is changing the landscape of data centers and creating a new infrastructure demand. This is a hidden investment opportunity that is currently underestimated by Mr. Market.
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Hidden Opportunities: Power Generation Producer Factory.
Stephen Byrd of Morgan Stanley said on Yahoo Finance Live, “Infrastructure is where the opportunity lies…from power generation, power electronics, data centers, etc., everything will accelerate growth.”
Generative AI, which is typically processed on graphics processing units (GPUs), has higher power requirements due to higher computational requirements. As data centers grow rapidly across the country, greater power demands are created, which puts pressure on the already strained power grid in the United States.
“Data centers not only enable the development of AI, but are the backbone of our industry, commerce, transportation and healthcare. Data centers are critical infrastructure. Therefore, it is important that while we promote AI as a new industry, it does not impact the current There is an impact on the industry,” ClearView Energy Partners executive director Timothy Fox said on Yahoo Finance.
The International Energy Agency (IEA) estimates that global data center electricity consumption may jump from 460 terawatt hours in 2022 to more than 1,000 terawatt hours in 2026, roughly equivalent to the electricity consumption of the entire Japan.
Byrd said this is a potential boon for power producers such as Bloom Energy (BE). He told Yahoo Finance that the fuel cell company is one of the companies “well-positioned to meet the rapidly growing power needs of generative AI enablers.”
“While the company’s stock price is underperforming, this technology allows data center developers to get new centers up and running very quickly,” Byrd said. “The time it takes to secure energy supply is critical and financially valuable for a data center…Bloom Energy’s fuel cells can be ready in 50 days.”
During Bloom Energy’s last quarter earnings call, CEO KR Sridhar told analysts that he sees AI data centers as the company’s “biggest single area” of growth over the next decade.
“The sales pipeline in this area alone is huge, not in the megawatt range but in the gigawatt range,” Sridhar said.
In addition to fuel cell generator manufacturers, other independent power producers, including nuclear power plant owners, are also poised to grow through future data center construction.
Bank of America research analyst Paul Cole sees Constellation Energy (CEG), Public Service Enterprise Group (PEG), Vistra (VST), NextEra Energy (NEE) and Dominion Energy (D) as “clear beneficiaries” of energy growth.
Although AI’s energy consumption has surged over the past year, Wall Streeters believe the industry is still only scratching the surface when it comes to energy consumption.
“In terms of power growth, GenAI growth will remain around 100% annually for many years to come. As compute costs fall and new use cases emerge, the need for compute will only continue to rise. We are still in the early days of this dynamic stage, what investors are now starting to consider is the entire value chain that provides power to these data centers,” Cole added.
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