Data Center Stocks Are Heating Up, Are You Ready for What’s Next?

Keith Kohl

Written By Keith Kohl

Posted June 11, 2024

The road to the widespread adoption of AI technology is paved in data center stocks. 

It’s an uncomfortable truth that much of the market doesn’t want to address, because with it comes a number of hurdles that could threaten to bring the entire AI boom to a screeching halt. 

Don’t believe me? 

Well, close your eyes for a moment and think about what took place with the adoption of another critical piece of technology — the internal combustion engine. 

During the 1920s, the rise of ICE cars started to dominate vehicle sales. Although much of that is thanks to the Ford Model T, not many people out there realize that none of it would’ve been possible without a key piece of automotive infrastructure. 

You see, in 1920, there were only around 15,000 gas stations in the United States, with roughly 7,500 curbside pumps on top of that. Within the next 10 years, the number of gas stations in the U.S. swelled more than 100,000!

Today, there are still nearly 200,000 retail gas stations supplying everyday motorists with fuel. 

Without that critical infrastructure, the roads would look entirely different today. 

There’s a similar story being played out right now in the world of AI, and its adoption will depend on building the necessary data centers to support it.

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Data Center Stocks: Are Investors Ready for What’s Next?

Here’s the dirty little secret: Big Tech is pumping billions of investment dollars into building U.S. data centers. 

And what’s more surprising is where they’re being built.

Today, the amount of cash flowing into new data centers is staggering. 

Recently, Google announced that it’s shelling out a billion dollars to expand three data centers in northern Virginia. The state just so happens to have the largest concentration of data centers in the world. 

That’s on top of another billion dollars that Google is spending on a new data center in Kansas City, Missouri, as well as another $2 billion it’s investing in northeast Indiana. 

And while Virginia may hold the crown as the global epicenter for data centers, that title may change hands in the future. 

Amazon Web Services said last April that it was pouring $11 billion in Indiana, making it the largest capital investment in the state’s history.

In fact, Amazon is planning on investing roughly $150 billion over the next 15 years on data centers.

“So what’s the problem? Isn’t it GOOD that this infrastructure is being built right now?,” you ask. 

Of course it is. 

However, the very serious problem that investors need to be ready for is how we’re going to power it all.

Look, you and I both know that these data centers — the physical facilities that store and process an untold amount of data — have one huge weakness. It’s not a flaw, mind you, just simply a fact of life that tomorrow’s AI data centers come with a serious catch.

I’m talking about energy, the one thing that can bring AI crashing down.

Everyone knows it, and yet nobody wants to address it. 

To give you an idea of the problem we’re facing, the IEA warned us in a recent report that global electricity demand is now expected to rise at a faster rate over the next three years — roughly 3.4% annually through 2026. 

More to the point, the IEA goes on to report that electricity consumption from data centers, AI, and crypto will double to more than 1,000 TWh over the next two years. To put a little perspective on that, it’s roughly the same amount as Japan’s annual power consumption. 

Now let’s just take Indiana as an example and break things down a bit. 

In 2023, nearly half of Indiana’s electrical generation came from coal, with another 40% coming from natural gas… so much for the clean energy push, right? 

Truth is, Indiana relies heavily on coal for a lot of power generation today. However, the Hoosier state also leads the country in upcoming coal plant retirements, with a dozen coal units expected to close over the next four years!

That’s a problem. 

However, the issues run a little deeper, too. You see, these data centers require a steady supply of baseload power — something that solar and wind simply cannot provide on the scale needed. 

And that, dear reader, is where the opportunity for individual investors lies. We’re starting to see some of the biggest names in AI like Microsoft turn to nuclear power for the massive electricity they’ll require for data centers going forward. 

That’s where the development of next-gen nuclear technology will play a critical role. In some cases, those shuttered coal plants can be repurposed to provide a clean and stable source of baseload power. 

This is the master key that will unlock the energy AI needs to take the next step. 

I strongly recommend you take a moment and check this one out for yourself directly right here.

Until next time,

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Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.

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