Microsoft (NASDAQ: MSFT) is investing heavily in the construction of data centers to support the growth of its cloud computing and artificial intelligence (AI) activities. These facilities require enormous power, especially when used for AI. For example, AI applications such as ChatGPT require 10 times the electricity required to process a search query compared to a typical Google search query.
This will help Microsoft secure the power to support its growth ambitions. It recently signed a deal to nuclear energy produced by Constellation energy (NASDAQ: CEG). It also drew a huge renewable energy to deal with Brookfield Renewable (NYSE: BEPC)(NYSE: BEP)These agreements ensure that Microsoft has the power it needs to thrive in the future.
Using nuclear energy
Microsoft recently signed a 20-year power purchase agreement (PPA) with leading nuclear power producer Constellation Energy. The deal will help launch the Crane Clean Energy Center by restarting Three Mile Island Unit 1, which the company shut down five years ago for operational and economic reasons. It will now bring it back online to power Microsoft’s data centers with carbon-free energy for decades. to come.
Constellation Energy expects the restarted nuclear plant, renamed after its former CEO, to begin producing power in 2028. It will be the first-ever restart of a previously retired nuclear plant in the country. The company plans to invest approximately $1.6 billion in bring the plant back online.
It would have the capacity to generate 835 megawatts (MW) of carbon-free electricity and could operate until at least 2054. The 20-year agreement for capacity at the revamped Crane Clean Energy Center is the largest PPA ever signed by Constellation Energy. It will provide the utility with stable income for the next two decades.
Three Mile Island Unit 1 is located next to the infamous Unit 2, which was shut down in 1979 after a partial meltdown. That accident, the nation’s most famous, did not affect Unit 1. Constellation Energy will not restart that second unit.
Capitalizing on Microsoft’s Need for Power
Constellation Energy isn’t the only company capitalizing on Microsoft’s need for power. The tech giant signed a massive partnership with Brookfield Renewable in May. The deal will see the leading global renewable energy producer deliver more than 10.5 gigawatts (GW) of new renewable energy capacity by 2030.
That agreement is the largest corporate PPA ever signed, nearly eight times larger than the previous record. It provides Brookfield with a path to build and deliver 10.5 GW of new renewable energy capacity in the U.S. and Europe to support Microsoft’s cloud and AI expansions, while helping it achieve its goal of sourcing 100% of its energy from carbon-free energy by 2030. It builds on their existing agreements where Brookfield delivers Microsoft with a power capacity of almost 1 GW.
While that deal will initially include renewable energy in the U.S. and Europe, it could expand to other regions, such as Asia Pacific, India and Latin America, where Brookfield also has a strong operational presence. It will also focus on more than wind And solar to incorporate new or impactful carbon-free energy generation technologies.
Meanwhile, Microsoft’s support for nuclear power could also benefit Brookfield. While it doesn’t operate nuclear plants, it does have investments in Westinghouse, a leading global nuclear services company. Westinghouse could help restart dormant nuclear plants and build new nuclear capacity, such as small modular reactors.
Strong growth potential
The next two decades will be An unparalleled period for electricity extension worldwide to support the growth of cloud computing, AI, electric vehicles and other demand factors. Microsoft is making sure it stays ahead of the curve by grabbing as much equity as possible to support its growth ambitions. That’s fueling the growth of Constellation Energy and Brookfield Renewable, which should grow significantly in the coming years. to comewhich makes them great stocks buy for those who want to profit from the coming energy boom.
Should You Invest $1,000 in Microsoft Now?
Before you buy Microsoft stock, here are some things to consider:
The Motley Fool Stock Advisor team of analysts has just identified what they think is the 10 best stocks for investors to buy now… and Microsoft wasn’t one of them. The 10 stocks that made the cut could deliver monster returns in the years to come.
Think about when Nvidia made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $710,860!*
Stock Advisor offers investors an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks each month. The Stock Advisor has service more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns as of September 16, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Matt DiLallo has positions in Alphabet, Brookfield Renewable, and Brookfield Renewable Partners. The Motley Fool has positions in and recommends Alphabet, Brookfield Renewable, Constellation Energy, and Microsoft. The Motley Fool recommends Brookfield Renewable Partners and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Microsoft is going nuclear. These are the biggest beneficiaries of its massive power grab. was originally published by The Motley Fool
