The Biggest Story In Business Is AI's Voracious Search For Energy, Here are A Few Stocks Ready To Profit From The Surge

24/7 Wall St. Key Points:

• AI-related electricity demand is driving infrastructure deals, with companies like Meta (NASDAQ: META) and OpenAI seeking massive power capacity, boosting prospects for utilities and energy providers.
• Utilities such as Dominion Energy (NYSE: D), Constellation Energy (NASDAQ: CEG), and Entergy (NYSE: ETR) are emerging as strategic beneficiaries due to geographic advantage and partnerships with AI and data center operators.
• Natural gas is expected to play a central role in meeting new electricity needs, with Williams Companies (NYSE: WMB) and other pipeline operators positioned to profit, while coal may see a short-term resurgence due to capacity constraints.
• If you’re ready to profit from the massive AI tailwind, check out ‘The Next Nvidia Stocks’ which are ready to soar in 2025. You can see the full list here, it’s free. 

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Transcript:

[00:00:04] Doug McIntyre: Lee, maybe the biggest story right now in business, AI searching for energy. electricity use in the United States has been relatively flat for two decades. Suddenly. You’ve got AI, which is probably the biggest electricity hog in, the world in history. And the other thing you’ve got is because of global warming, you’ve got air conditioning, eating up a lot of electricity.

[00:00:32] Doug McIntyre: What I see happening right now is these companies that are big into AI, they’re looking for electricity. They’re literally scouring the United States. Yeah. Because they know that the grid as it is now, electricity generation as it is right now, these things are close to capped. So what are you seeing right now in terms of people going out and looking for electricity?

[00:00:58] Lee Jackson: I’ve seen three different interesting deals. one of them is, Meta and Open AI kind of looking for energy for a huge gigawatt plant, in the Midwest. So they’re, working with Reliance, trying to get a partnership together to take, care of these huge needs. Also, I’ve seen that Williams Company, which is based up in, Oklahoma, they’re working in Ohio and back in there to try to get a literally online nat Gas to power plants for AI, for Bitcoin, mining, it takes a massive amount of electricity.

[00:01:46] Lee Jackson: And so I think you’re starting to see more and more of a transition. And like we’ve mentioned in the past, it’s not gonna be that easy to build a small nuclear reactor, but. It’s not gonna be that easy, but it is easier to put, natural gas in place to, current running, utilities to beef up their potential for, electricity output, because it’s only gonna grow.

[00:02:16] Lee Jackson: They say that the Ercot in Texas is gonna grow, the demand’s gonna grow up to 60% over the next 10 or 15 years, and a lot of that is a function of people moving to Texas, of course. Like Florida. But a lot of the fact that businesses relocating, their corporate headquarters out of California, out of Delaware, out of all these other places and moving to Texas ’cause it’s so business friendly.

[00:02:41] Lee Jackson: So I think it’s smart for people to look at Williams in this big, pipeline to get net gas into a plant and look at what’s going on with other companies. Because it ain’t gonna stop now. It is not gonna stop now, and it’s only gonna increase over the next 10 years.

[00:02:58] Doug McIntyre: There are a couple of utilities you like when it comes to narrative.

[00:03:01] Lee Jackson: Yeah. I mean, we love Dominion. ‘Cause Dominion’s, has 7 million plus customers in the Carolinas and over there. That’s a great, great company. And, we love Constellation because they, have a big presence and not the Constellation Liquor guys, but the Constellation energy guys because they have a big, footprint in the Washington DC area where there is

[00:03:27] Doug McIntyre: So many farms huge out in Arlington.

[00:03:28] Lee Jackson: Yeah, they’re everywhere there. So, I mean, that’s a solid play. Enter Jesus, solid play. And I just think that, I think one of the things that people need to look for is how much Nat Gas is gonna play a part of this. ’cause it’s gonna be huge.

[00:03:46] Doug McIntyre: Well, the other thing that happens right now is it brings coal back into the mix.

[00:03:50] Doug McIntyre: Yeah. If you’re, because. They want to use existing infrastructure as much as they can, even though coal is for obvious reasons, the dirtiest of the fossil fuels. Absolutely. Everybody tried to rotate away from that. But here’s the problem. It’s gonna take a while to put in solar. It’s going to take a while to put in wind.

[00:04:10] Doug McIntyre: If wind doesn’t get the bejesus beat out of it by the current environment, and that means that they’re gonna have to, even if it isn’t popular, say, well, where do we go to generate electricity? Well, we’ve already got these facilities that can use coal. So as much as people are going to, be upset about it, coal is now going to be coming back into favor economically.

[00:04:38] Doug McIntyre: As a way to generate electricity.

[00:04:40] Lee Jackson: Yeah. And again, we really don’t need to hear it from anybody else about pollution and all that. The Chinese run coal plants 24/7 365, which are the cause of most of the CO2 pollution and that kind of pollution in the world. So, opening up a few plants while the other items come online.

[00:05:01] Lee Jackson: And again, they’re using more wind, they’re using more solar, which is kind of helping, but it, won’t be anywhere near as readily available as natural gas. And we have a ton of it in the United States and more to be found.

[00:05:18] Doug McIntyre: Well, what that tells me is that the utilities industry, that sector was boring for decades.

[00:05:25] Doug McIntyre: All if you need to go over and look at the fact that a sector that’s been boring for a long time is not boring now.

[00:05:37] Lee Jackson: No, And the thing is, again, and you mentioned this in something we were discussing earlier, I mean, people have gotten spoiled. I mean, two 20% plus years in 2023 and 24 on the s and p 500.

[00:05:49] Lee Jackson: That’s just not normal. That’s normal average. total return gain, which is usually more from the seven to 9%. So, boring might be good for a while and utility dividend stocks are, and the, one like Dominion, I know is over, well over 4.5%. I think it’s up, right?

[00:06:07] Doug McIntyre: That’s right. The other thing about utilities is that you’re also getting some yield. So look, if you’re a young investor, you probably never looked at utilities. You should have a look. If you’re an older investor, you did look at ’em, but it probably has been a lot of years since you have. You should revisit them and look at some of these utility stocks.

[00:06:28] Doug McIntyre: Look for the ones that are talking about AI ventures. The people who are moving in that direction. The demand is going to be insatiable. So if you’ve got somebody doing partnerships with big AI companies

[00:06:43] Doug McIntyre: That demand’s gonna be there forever.

[00:06:45] Lee Jackson: Yep. Yep. It absolutely is. Because the grid just can’t take any more stress.

[00:06:50] Lee Jackson: I mean, the, this is something that, I mean, that’s tied into fundamental use just for regular life. And, it’s funny, where I live, Atmos (NYSE: ATO) is the gas supplier, the natural gas supplier. Well, they had a pipe blow up. Our gas was out for a week. A week and Atmos had to send in like 500 people from everywhere, which just shows you, it’s that tender.

[00:07:17] Lee Jackson: The grid is that tender. I mean, one pipeline could take a whole city, Tupelo isn’t real big, but still, I mean, we didn’t have gas for a week and that just shows you that everything’s, kind of held together with rubber bands and bailing wire and, duct tape. And so these big utilities that are leaning more to natural gas and, working with, big data centers.

[00:07:44] Lee Jackson: You’re right Doug. That’s a place to be.

[00:07:46] Doug McIntyre: Yep. If you love AI and you think the AI stocks are getting expensive, look over the fence utilities because they are a secondary play in when you look at the AI sector.

[00:07:57] Lee Jackson: Yeah, they absolutely are.

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