Demand for artificial intelligence (AI) capabilities is soaring. Companies are rapidly building more and larger data centers to train AI models and deploy AI applications. This buildout looks poised to go on for many years as companies race to go beyond generative AI and achieve artificial superintelligence.
This buildout should power shares of AI chip and infrastructure leader Nvidia (NVDA -1.10%) much higher. But Nvidia won't be the only winner.
It takes an enormous amount of electricity to power these AI data centers. The electric grids in the United States and select other countries will need to be significantly upgraded and expanded to support the increasing AI-related power demand. This fact strongly supports a long-term buy thesis for grid-related stocks.
Image source: The Motley Fool.
The Nvidia-OpenAI $100 billion, 10+ gigawatt deal
Late last month, Nvidia announced that it's investing up to $100 billion in OpenAI, the AI model developer best known for its ChatGPT chatbot.
The companies plan "to deploy at least 10 gigawatts of Nvidia systems for OpenAI's next-generation AI infrastructure to train and run its next generation of models on the path to deploying superintelligence," per the press release. [Emphases mine.]
Putting 10 gigawatts of power in context
Here are a couple of stats to put in context 10 gigawatts of power:
- New York City's average power demand is about 6.5 gigawatts and its peak power demand in the summer is roughly 10 to 11 gigawatts.
- 10 large-scale nuclear reactors have a power output of about 10 gigawatts.
What is the electric grid?
The electric power grid is an interconnected network that has three main stages. This includes the generation of electricity from various sources (renewables, fossil fuels, and nuclear energy) to the high-voltage transmission lines that transmit power over long distances to the low-voltage distribution lines that carry electricity to homes and businesses.
Regulated electric utility companies are typically involved in all stages. Many other companies are involved in one or more stages of the electric grid -- and these companies are the focus of this article. Some do design and engineering work, some manufacture grid components, and some install grid components.
2 top electric grid stocks to buy
Companies are listed in order of descending size based on market cap.
| Company | Market Cap | Forward P/E | Wall Street's Estimated Annualized 5-Year EPS Growth | YTD 2025 Return | 10-Year Return |
|---|---|---|---|---|---|
| GE Vernova (GEV 1.25%) | $162 billion | 50.6 |
N/A. 66.2% next year. |
81.1% | N/A. Up 354% since began trading in April 2024. |
| Quanta Services (PWR 1.75%) | $62.8 billion | 33.4 | 16.9% | 33.4% | 1,630% |
| S&P 500 Index | -- | -- | -- | 15.3% | 310% |
Data sources: Yahoo! Finance, finviz, and YCharts. P/E = price-to-earnings ratio. EPS = earnings per share. YTD = year to date. Data to Friday, Oct. 3, 2025.
GE Vernova and Quanta pay very small dividends, currently yielding about 0.16% and 0.10%, respectively.
GE Vernova
GE Vernova was formed in April 2024 when General Electric completed its split into three separate companies. GE Vernova is a global energy-focused business with three operating segments: power, wind, and electrification.
The power business spans gas, hydroelectric, nuclear, and steam. The wind business produces wind turbines, and installs onshore and offshore wind farms. The electrification business provides grid solutions, power conversion, and storage.
GE Vernova is a powerhouse (pun intended) in the industry, as evidenced by this statistic: About 25% of the world's electricity is generated by its customers using its technologies, according to the company. The company size should ensure that it continues to benefit from economies of scale.
In the first half of 2025, GE Vernova's revenue grew 11% year over year to $17.1 billion. Growth was driven by the electrification business, whose revenue jumped 19% to $4.1 billion. Wind segment revenue rose 11% to $4.1 billion, and power's revenue grew 8% to $9.2 billion.
Net income on the basis of generally accepted accounting principles (GAAP) declined 36% to $756 million. However, on an adjusted basis (which is a better metric to gauge operating performance because it excludes one-time items), earnings before interest, taxes, depreciation, and amortization (EBITDA) surged 72% to $1.23 billion. Adjusted organic EBITDA grew 39% to $1.18 billion. (This metric excludes acquisitions and dispositions made within the last year and the impact of foreign currency exchange.)
Demand is strong for GE Vernova's products and services. In the second quarter, it grew its backlog by more than $5 billion from the first quarter. Total backlog is $129 billion.
With a forward price-to-earnings (P/E) ratio of 50.6, GE Vernova stock is reasonably valued for a company that Wall Street expects to grow earnings a whopping 66.2% next year.
Quanta Services
Quanta is a contractor that provides services including designing, installing, repairing, and maintaining energy and communications infrastructure. The company has two reportable segments: electric infrastructure solutions (electric) and underground utility and infrastructure solutions (underground and infrastructure). It operates in the U.S., Canada, and certain other international markets.
In the first half of 2025, Quanta's revenue grew 22% year over year to $13.0 billion. The electric segment's revenue jumped 24% to $10.4 billion, and the underground and infrastructure segment's revenue rose 17% to $2.6 billion. Profit growth was also robust, with GAAP net income increasing 22% to $374 million, which translated to earnings per share (EPS) rising 20% to $2.47.
There's strong demand for the company's services. It ended the second quarter with a total backlog of $35.8 billion.
Quanta had a notable contract win in Q2. It was selected by Idaho Power -- a subsidiary of IDACORP -- for the Boardman to Hemingway High-Voltage Electric Transmission Project. This project involves a new approximately 300-mile, 500-kilovolt transmission line running from eastern Oregon to southwestern Idaho. Quanta will provide design, engineering, procurement, environmental, and construction solutions. This project is designed to deliver up to 1,000 megawatts (or 1 gigawatt) of bidirectional power.
With a forward P/E of 33.4, Quanta stock is a little pricey for a company that Wall Street expects to grow earnings at an average annual rate of 16.9% over the next five years. But investors should expect to pay up for quality. Moreover, it seems to me that Wall Street could be underestimating Quanta's earnings growth potential.
In short, the electric grid will need to be significantly upgraded and expanded to support the increasing AI-related power demand. And the stocks of select companies that perform this work should make attractive long-term investments.
