It's no secret that AI consumes a lot of energy. The numbers are just staggering. The typical AI data center uses as much power as 100,000 households. Meanwhile, the largest AI data centers consume 20 times that amount.
Access to power is becoming an obstacle as AI scales, due to the pressure it's placing on the electric grid and energy prices. As a result, a growing number of AI data center developers are also building the power they need into their projects. They're doing that through partnerships with Bloom Energy (BE +1.37%) and NextEra Energy (NEE +0.54%). That makes them some of the top energy stocks to buy to capitalize on the AI data center boom.
Image source: Getty Images.
Plugged into a powerful growth trend
"Bring-your-own-power has shifted from a slogan to a business necessity for AI hyperscalers and manufacturing facilities," stated Bloom Energy CEO KR Sridhar in the company's fourth-quarter earnings press release. He noted that, "This shift is secular and growing." That's helping power surging demand for the company's advanced fuel cell technology. Data center developers can install these systems on-site to provide ultra-resilient power to this crucial AI infrastructure.
For example, Bloom Energy formed a strategic AI infrastructure partnership with leading global investment firm Brookfield Corporation (BN 3.77%) last year. Brookfield will invest up to $5 billion to deploy Bloom's advanced fuel cell technology. Brookfield and Bloom are collaborating to redefine how to build and power AI factories (specialized, large-scale AI data centers). As a leader in investing in clean energy and infrastructure, Brookfield is taking a holistic approach to developing data centers and related AI infrastructure. In addition to working with Brookfield, Bloom Energy is helping power digital infrastructure through partnerships with AEP, Equinix, and Oracle.
NYSE: BE
Key Data Points
The bring-your-own-power trend helped Bloom Energy deliver record revenue last year at over $2 billion, a 37% surge from 2024's level. The hydrogen fuel cell company also generated positive free cash flow for the second straight year. Meanwhile, there's more growth ahead as Bloom's backlog ballooned to $20 billion, up 2.5 times year-over-year.
Building the generation that data centers need
NextEra Energy is also seeing the data center market shift from buying power to "bring your own generation (BYOG)." CEO John Ketchum noted on the utility company's fourth-quarter earnings conference call that this shift "makes sense given affordability concerns across the U.S." He stated that large-scale data center companies can "solve that problem by bringing and paying for their own power generation and infrastructure." Ketchum believes: "We are uniquely positioned to deliver for the BYOG market across America. That's because at our core, (NextEra) Energy Resources is a builder."
NYSE: NEE
Key Data Points
For example, the power company has partnered with Alphabet's (GOOG 1.76%)(GOOGL 1.67%) Google to jointly develop multiple gigawatt (GW)-scale data center campuses. The collaborative approach will enable them to more rapidly develop data centers by focusing on securing the land, load interconnection, and supporting generation and capacity resources to build large-scale data center campuses. NextEra Energy and Google are also exploring the potential to develop new nuclear power plants to help meet the country's growing energy needs. Google has already signed a deal with NextEra to support the restart of a dormant nuclear power plant, which should come back online by 2029.
NextEra Energy is also partnering with Exxon on a 1.2 GW gas-fired power plant to power a large data center. The energy companies are pitching the 2,500-acre site to data center developers.
The utility aims to develop 15 GW of powered data center hubs by 2035. It currently has 20 hubs under discussion, a number that could rise to 40 by the end of this year. Given the size of the opportunity, Ketchum would be "disappointed if we don't double our goal and deliver at least 30 gigawatts through this channel by 2035."
NextEra's data center power strategy supports its view that it can grow its earnings per share by more than 8% annually over the next decade. That's a brisk pace for an electric utility.
Bringing power to data centers
Data center developers are realizing they need to bring their own power supplies to build and operate their projects. That's leading them to partner with Bloom Energy and NextEra Energy on power solutions for their developments. This trend should power robust growth for these energy stocks in the coming years, making them compelling ways to play the AI data center boom.
