Artificial intelligence (AI) has become one of the biggest themes in investing, and it has helped to generate big enthusiasm for technology stocks during the past year. But what if there were another way to get more AI exposure in your portfolio without as much potential volatility and risk?
Well, you could also invest in pick-and-shovel plays -- companies that are supporters of the massive buildout of AI data centers, such as energy companies. The International Energy Agency projects that global electricity consumption by data centers will at least double by 2030, and many energy producers and utility companies are poised to benefit from that skyrocketing demand.
Dominion Energy (D +2.15%) is one of them. Its stock has gained 10.5% in the past year, and there are a few reasons why it could be a good buy for AI investors.
NYSE: D
Key Data Points
Dominion Energy provides power in "Data Center Alley"
With its headquarters in Richmond, Virginia, Dominion Energy provides electricity to a state that is home to nearly 600 data centers. Indeed, Loudoun County in northern Virginia is known as "Data Center Alley" because it is home to the world's largest cluster of data centers.
A state government study published in 2024 found that northern Virginia's data centers account for 13% of the world's operational capacity and 25% of capacity in the Americas. If the growth of Virginia's data center industry continues, that will drive big demand for energy there. The state's study found that unconstrained demand for power in Virginia was expected to double within the next 10 years.
That's good news for Dominion. It is already under contract to build 40 gigawatts of new generation capacity to provide power to more than 70 new data centers being planned for Virginia.
Image source: Getty Images.
Diversified clean energy provider
Although the company's most exciting growth prospects are coming from the AI sector, Dominion Energy's business is about far more than just data centers. It provides electricity to 3.6 million homes and businesses across Virginia, North Carolina, and South Carolina, and natural gas service to 500,000 customers in South Carolina.
It's also one of the nation's leading producers of offshore wind and solar power, and the largest producer of carbon-free electricity in New England. And its nuclear power stations account for more than 40% of the company's electricity generation. If you're interested in investing in clean and lower-carbon energy, Dominion Energy could be a good stock to buy.
Investing in electric utility stocks like Dominion Energy could also be a good way to broaden and diversify your AI investments. This could help you benefit from the upside of the AI boom without relying too heavily on just a few big AI companies.
