AI data centers consume an enormous amount of electricity to run the specialized chips this technology requires and the cooling systems needed to keep them from overheating. AI data centers in the U.S. alone could require an additional 60 gigawatts (GW) of power capacity by 2030, roughly equivalent to Italy's peak power demand, the eighth-largest economy in the world.
As a result, the world will need to build much more power generation capacity in the future, which bodes well for the energy sector. Here are three energy stocks that could benefit the most from the AI gold rush.
Image source: Getty Images.
Brookfield Renewable
Brookfield Renewable (BEPC 1.33%)(BEP 0.90%) is a leading global renewable energy producer. The company operates hydro, wind, solar, and energy storage assets. Additionally, it has a growing sustainable solutions platform that includes nuclear services.
The company has become a partner of choice for large technology companies seeking to secure power for their data centers. Brookfield is currently delivering over 10.5 GW of new renewable energy capacity to support Microsoft's operations through 2030, the largest ever corporate power purchase agreement (PPA). Brookfield also signed the largest-ever corporate hydropower framework agreement with Alphabet (GOOGL 1.66%)(GOOG 1.68%) subsidiary Google, for up to 3 GW. The first two 20-year PPAs under that deal represent more than $3 billion in revenue and 670 megawatts (MW) of capacity.
NYSE: BEPC
Key Data Points
These deals help support Brookfield's robust growth outlook. It expects to grow its funds from operations (FFO) per share at a more than 10% annual rate through 2030. That should enable the company to increase its nearly 4%-yielding dividend by 5% to 9% each year.
NextEra Energy
NextEra Energy (NEE 0.06%) owns the largest electric utility in the country (FPL) and a leading energy infrastructure development company (NextEra Energy Resources). These businesses make it one of the biggest producers of wind and solar energy. It's also a leader in energy storage, natural gas infrastructure, and nuclear energy.
NYSE: NEE
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Technology companies are also turning to NextEra Energy to power their AI ambitions. NextEra has signed two major deals with Google. The companies announced a new collaboration last year to accelerate nuclear energy deployment in the U.S., including Google signing a 25-year PPA to support the restart of the dormant 615-MW Duane Arnold Energy Center in Iowa, which should resume operations in 2029. Additionally, they signed a landmark energy and technology partnership to accelerate AI growth, which will include jointly developing multiple GW-scale data center campuses. NextEra also recently signed 11 PPAs and two energy storage agreements with Meta Platforms totaling 2.5 GW to support the social media giant's AI operations.
These deals help drive NextEra Energy's high-powered growth prospects. The utility expects to deliver more than 8% annual earnings-per-share growth through 2035. That supports its highly visible near-term dividend growth forecast. It plans to boost its nearly 3%-yielding payout by about 10% this year and deliver 6% compound annual growth in 2027 and 2028.
Williams
Williams (WMB 1.01%) is a leading gas infrastructure company. It operates over 33,000 miles of gas pipelines across 24 states, handling about one-third of the gas consumed in the country.
NYSE: WMB
Key Data Points
The company has begun leveraging its expertise in gas infrastructure by investing in power innovation projects for data center operators. The company plans to invest $2 billion in its Socrates project in Ohio to build two 200-MW gas-fired power plants. It recently announced two additional power innovation projects to support growing data center demand, bringing its total investment in such projects to $5.1 billion. Williams is evaluating over 6 GW of potential power projects.
Williams is also building new gas infrastructure to meet the growing demand for gas. It currently has projects under construction that should enter commercial service through the third quarter of 2030. It's evaluating more than 30 additional gas infrastructure opportunities representing more than $14 billion of investment potential through 2033. Williams' robust growth outlook should give it plenty of fuel to continue growing its more than 5% yielding dividend.
High-powered total return potential
Brookfield Renewable, NextEra Energy, and Williams are in strong positions to capitalize on the coming surge in power demand to support AI. They should be able to grow their earnings at healthy rates, supporting the continued growth of their high-yielding dividends. That growth and income combo could fuel high-powered total returns for investors in the coming years.
