Shares of Texas Pacific Land Corporation (TPL +1.00%) rocketed 50.5% in February, according to data from S&P Global Market Intelligence.
Texas Pacific Land is usually viewed as an asset-light oil and gas play, owning 882,000 surface acres and 224,000 NRA (net royalty acres) of oil and gas royalty interests in Texas, mainly near the Permian Basin.
With oil and gas prices rising amid geopolitical tensions, it's no wonder TPL's stock rose in sympathy. But TPL is also fast becoming a data center play, given the significant AI development activity in the state. During its fourth-quarter earnings report, released mid-month, management had some additional exciting news to share on the AI front.
NYSE: TPL
Key Data Points
TPL is ideally position for AI in Texas
In a way, Texas Pacific Land may be one of the most ideally positioned stocks for the artificial intelligence revolution -- outside of the technology sector, that is. Artificial intelligence data centers need access to lots of cheap land, as well as energy and water. Texas Pacific has all of that in spades.
Since TPL owns not only oil and gas royalties but also a large amount of surface land, it can charge data center operators rent, and charge for easements for pipelines and power lines. TPL is also a major water producer in the state, with its own water treatment subsidiary. In fact, water sales accounted for 38% of the company's revenue in 2025.
But it was the "traditional" oil and gas segment that likely drove shares higher in the early part of the month. That is when tensions between Iran and the U.S. began to percolate in the lead-up to the recent war, which broke out on Feb. 28, leading to higher oil prices.
TPL's royalty revenue is based on a percentage of the total revenue its lessees sell from barrels produced on its land, so as oil and gas prices rise, so do TPL's revenue and profits.
Image source: Getty Images.
While rising oil and gas prices helped the month's performance, management also held the company's fourth-quarter earnings release during the month. Texas Pacific posted solid results, with revenue up 13.6%, beating analyst estimates by a bit. Earnings per share of $1.79 came in line with expectations.
However, it was likely the additional commentary on the AI data center opportunity that really excited investors. In December, TPL invested in an AI data center start-up called Bolt, led by former Google CEO Eric Schmidt. On the February conference call with analysts, TPL management noted that Bolt has ambitions to build out 10 gigawatts of data centers on TPL land over time -- a massive amount of computing power. Per the agreement with Bolt, TPL has the right to acquire additional shares of Bolt in exchange for providing land to these future data centers, and TPL also has the right of first refusal to provide water to Bolt's facilities and associated power generation.
Data centers will require a huge amount of water, so the prospect of building massive AI data centers in West Texas could benefit TPL in many ways, including its water business, leasing revenues, ownership of Bolt, and any increase in demand from natural gas, which is becoming the key fuel to satisfy booming electricity demand from these AI data centers.
TPL isn't cheap, but has a compelling growth story
After February's rise, Texas Pacific Land doesn't look cheap, at 72 times trailing and 42 times forward earnings estimates.
However, TPL is a very asset-light company, so it should perhaps have a higher-than-normal valuation multiple. Moreover, if we are entering a period of sustained elevated oil and gas prices and a long-term build-out of AI infrastructure in West Texas, the company should have years of profitable growth ahead.
