The escalating electricity demands of running AI data centers will deliver downstream investment benefits in the utility, renewable energy generation and industrial sectors, according to Goldman Sachs.
In a recently published study, stock analyst Carly Davenport noted a basket of stocks positioned to benefit from the potential boom in U.S. energy demand.
The investment bank predicts that energy demand in data centers will grow at a compound annual growth rate of 15% between 2023 and 2030. This growth trajectory is expected to increase data centers’ share of total U.S. energy demand to 8% by 2030, up from the current level of approximately 3%.
“American energy demand is likely to experience growth unlike any seen in a generation. Since the beginning of this century, U.S. electricity demand has not grown 2.4% in eight years, while annual U.S. electricity generation has grown on average less than 0.5% over the past 20 years,” Goldman Sachs points out.
Analysts estimate that approximately 47 GW of additional power generation capacity will be needed by 2030 to meet the growth in power demand in U.S. data centers. This demand is expected to be met by approximately 60% gas and 40% renewable sources.
The projection suggests that this trend will drive approximately $50 billion in capital investments in U.S. power generation capacity by 2030.
Goldman Sachs has identified 16 stocks rated “buy” across a variety of sectors, including utilities, clean tech, midstream, energy services, industrials and industrial technology.
The featured stocks are as follows:
Beneficiaries of the growth in energy demand
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Vertiv Holdings Plc (NASDAQ:VRT): Solid market presence in thermal cooling and energy management.
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NextEra Energy Inc. (NYSE:NEE): Renewable sector strategically positioned for AI data loads and available interconnection queues.
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Cameco Corporation (NYSE:CCJ): Provider of clean energy storage solutions for the backup power needs of data centers.
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EQT company (NYSE:EQT): Beneficiary of growing nuclear energy capacity as a uranium producer and nuclear fuel supplier.
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Fluence Energy Inc. (NASDAQ:FLNC): Natural gas producer is poised to benefit from increased demand due to electric load expansion.
Additions to energy generation capacity
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Xcel Energy Inc. (NASDAQ:XEL): Regulated utilities exposed to power generation must support data center growth at the Midwest Independent Transmission System Operator.
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First Solar Inc. (NASDAQ:FSLR): Primary manufacturer and supplier of solar panels for utility-scale solar farms in the United States.
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Southern Company (NYSE:SO): Regionally positioned regulated utility poised to meet escalating data center demand through strategic generation investments.
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GE Vernova (NYSE:GEV): Positioned to benefit from continued growth trends as a provider of power generation assets.
Investment needs in energy infrastructure
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Quanta Services Inc. (NYSE:PWR): Specialist utility construction contractor ready to reap the benefits of increased electricity demand.
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MYR Group Inc. (NASDAQ:MYRG): Involved in data centers through transmission and distribution (T&D) projects, establishing itself as a major player in electricity contracting.
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DBA Sempra (NYSE:SRE): Utility spends substantial capital expenditures on T&D infrastructure to support data center expansion in Texas.
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Kinder Morgan (NYSE:KMI): The leading operator of natural gas pipelines in the United States will benefit from rising demand for gas-fired generation.
Beneficiaries of the industrial supply chain
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Eaton Corporation (NYSE:ETN): Manufacturer of electrical components ready to benefit from the continued increase in energy demand.
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nVent Electric plc (NYSE:NVT): Major player in liquid cooling technology, forecasting double-digit business growth within the Data Solutions sector.
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Caterpillar Inc. (NYSE:CAT): Construction equipment company that can supply generator sets to data centers for backup power needs.
Demand for AI data centers will triple by 2030After relatively flat growth between 2015 and 2019, Goldman Sachs expects data center energy demand to more than triple from 2020 levels by 2030.
Analyst estimates suggest an upside scenario in which demand could more than double the base case, driven in part by improvements in product efficiency and increased demand for AI-related technologies.
“There could be a meaningful benefit to our base case if interest in purchasing and using servers is unlimited,” Davenport said.
“There could be a downside to our base case if energy efficiency is higher than expected or if energy/compute speed efficiency results in fewer servers being purchased than expected,” the analyst added.
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