As the race to power artificial intelligence accelerates, U.S. data centers face mounting pressure on electricity supply. According to Morgan Stanley, this “AI energy rush” is creating a wave of opportunity for companies involved in generation, grid infrastructure, and related equipment. Here’s a closer look at the looming power bottleneck, near‐term catalysts, and top stock picks poised to benefit.
1. The Coming Power Bottleneck
Morgan Stanley’s latest modeling forecasts a 45 gigawatt shortfall in data center power capacity through 2028. Key factors include:
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Rapid AI Infrastructure Growth
Investments in large AI clusters (e.g., Nvidia’s supercomputing deployments) are driving exponential demand for electricity in regions like Texas, Northern Virginia, and Oregon. -
No Quick Federal Fix
With no immediate federal grid expansion plan, analysts expect natural gas and nuclear to bridge the gap. Natural gas plants can be built more quickly, while existing nuclear capacity provides baseload support. -
“Time to Power” Dynamics
Delivering electricity quickly—often called “time to power”—will become a high‐value service. Companies able to fast‐track generation or transmission upgrades can secure longer, higher‐margin contracts.
Investors tracking energy sector valuations can use the Sector P/E Ratio API to monitor how the utilities and energy sectors are priced relative to historical norms.
2. Legislative and Regulatory Catalysts
Senate Bill 6 in Texas
Texas’s Senate Bill 6 aims to streamline approvals for new power projects. Passage of this bill could unlock numerous natural gas pipelines and generating plants, benefiting companies like:
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Vistra Corp. – Retail electricity and generation.
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NRG Energy – Power producer with flexible natural gas assets.
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ExxonMobil (NYSE:XOM) – Supplier of natural gas and LNG.
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Energy Transfer (NYSE:ET) – Midstream operator potentially expanding capacity for gas delivery.
“Stargate” Pipeline Permit
Energy Transfer’s “Stargate” pipeline proposal is another focal point. If regulators approve this project quickly, it could:
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Reduce bottlenecks in gas transport to major data center hubs.
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Accelerate “time to power” by ensuring fuel supply for peaking plants.
Investors can gain insight into industry classifications—such as midstream, generation, or utilities—using the Industry Classification API to identify which companies are best positioned in the AI energy theme.
3. Bridging the Power Gap: Natural Gas and Nuclear
Natural Gas as a Quick Solution
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Fast Construction: Gas‐fired power plants typically have shorter build times compared to coal or large‐scale renewables.
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Flexible Output: Peaking plants can ramp quickly to meet AI workloads that spike unpredictably.
Nuclear for Baseload Reliability
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Zero Carbon Emissions: Existing nuclear plants provide carbon‐free baseload power essential for continuous AI operations.
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High Capacity Factors: Nuclear runs near full output year‐round, complementing intermittent renewables.
4. Top Stock Picks Aligned with Morgan Stanley’s Thesis
Morgan Stanley identified a roster of companies set to benefit from the surging need for “time to power.” Here are a few highlights:
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EQT Corporation (ST:EQTAB)
A leading natural gas producer focused on low‐cost Appalachian shale. -
Energy Transfer (NYSE:ET)
Midstream giant with extensive pipeline infrastructure to deliver gas to power plants. -
Williams Companies (NYSE:WMB)
Operates trunk pipelines and processing facilities critical for gas supply. -
Sempra (NYSE:SRE)
Utility holding company with significant growth projects in gas pipelines and LNG. -
Vistra Corp. (NYSE:VST)
Electric power producer in ERCOT (Texas), poised for capacity expansions. -
Berkshire Hathaway Energy (BE)
Diversified utility with investments in gas pipelines and generation. -
ExxonMobil (NYSE:XOM)
Major gas supplier, benefiting from increased fuel demand. -
Cummins Inc. (NYSE:CMI)
Engine maker whose gas turbines and gensets offer rapid power solutions. -
Public Service Enterprise Group (NYSE:PEG)
Provides electric generation and transmission in the Northeast U.S. -
AES Corporation (NYSE:AES)
Global power generator investing in gas and storage assets. -
NextEra Energy (NYSE:NEE)
While known for renewables, also expanding gas‐fired capacity. -
Vertiv Holdings (NYSE:VRT)
Supplier of data‐center power equipment and cooling solutions.
Investors can view trailing‐12‐month performance metrics and growth trends for these companies using the Key Metrics (TTM) API to inform portfolio decisions.
5. Conclusion: Positioning for the AI Power Wave
The AI revolution’s energy demands are reshaping U.S. power markets. With a 45 GW bottleneck projected, natural gas and nuclear emerge as vital bridging technologies. Time to power—the ability to deliver electricity quickly—will be rewarded with premium, long‐term contracts.
Legislative shifts, such as Texas’s Senate Bill 6, and regulatory moves around pipelines like Energy Transfer’s Stargate, act as near‐term catalysts. Companies that excel in generation, midstream infrastructure, and data‐center equipment stand to gain significant market share.
By focusing on sector valuations and company fundamentals through APIs like Sector P/E Ratio and Key Metrics (TTM), investors can navigate this evolving landscape and capitalize on the surging demand for AI power infrastructure.
