A massive surge in global power demand, driven by the insatiable energy needs of artificial intelligence, is set to ignite what experts are calling a “historic energy transition.”
Power Demand To Jump 30% By 2035
Global power demand is projected to skyrocket by 30% by 2035, according to a recent analysis by The Kobeissi Letter. The primary catalyst for this surge is data centers, whose share of total power use is expected to more than double from its current 1.5% to 3.5% as AI adoption accelerates.
This unprecedented demand is creating a clear set of winners in the energy sector, benefiting companies that can supply reliable, large-scale power.
Analyst Optimism On Energy Sector Sees Some Stocks Fly
Analysts note that this boom is particularly benefiting Independent Power Producers (IPPs). Companies like Vistra Corp. have seen stellar year-to-date performance of 28.99%.
The nuclear energy sector is also emerging as a prime beneficiary. With industry veterans like Cathie Wood highlighting nuclear as a potential lowest-cost source of electricity, stocks like Cameco Corp. have surged 93.35% YTD.
| Energy Stocks | YTD Performance | One Year Performance |
| NextEra Energy Inc. (NYSE:NEE) | 14.20% | 4.35% |
| First Solar Inc. (NASDAQ:FSLR) | 42.49% | 25.17% |
| Vistra Corp. (NYSE:VST) | 28.99% | 66.79% |
| GE Vernova Inc. (NYSE:GEV) | 71.49% | 96.73% |
| Cameco Corp. (NYSE:CCJ) | 93.35% | 97.17% |
| Hubbell Inc. (NYSE:HUBB) | 11.34% | 10.05% |
| Occidental Petroleum Corp. (NYSE:OXY) | -17.85% | -19.07% |
| Chevron Corp. (NYSE:CVX) | 5.00% | 0.05% |
Broader clean energy funds, such as the iShares Global Clean Energy ETF, are also capturing significant investor interest, boasting a 51.72% YTD gain. This performance starkly contrasts with broader energy ETFs, which have remained mostly flat.
| Energy Sector ETFs | YTD Performance | One Year Performance |
| Energy Select Sector SPDR Fund (NYSE:XLE) | 1.71% | -1.60% |
| Vanguard Energy Index Fund ETF (NYSE:VDE) | 1.50% | -0.26% |
| Fidelity MSCI Energy Index ETF (NYSE:FENY) | 1.37% | -0.29% |
| iShares Global Clean Energy ETF (NASDAQ:ICLN) | 51.72% | 30.86% |
| Alerian MLP ETF (NYSE:AMLP) | -4.31% | -0.36% |
| First Trust Natural Gas ETF (NYSE:FCG) | -9.88% | -4.43% |
| VanEck Oil Services ETF (NYSE:OIH) | 5.00% | 5.07% |
Electricity Demand By Data Centers Is Going To Be Massive
The scale of this new demand is staggering. The projected growth for data centers alone is 1,000 Terawatt-hours, as per the chart shared by Kobeissi, a figure that rivals the growth of the entire residential or transport sectors.
This demand is also highly concentrated, with the U.S. and China currently accounting for approximately 50% of all global power use.
The energy crisis in AI has become so acute that tech visionaries are proposing unconventional solutions. Reports indicate OpenAI and Samsung are exploring floating data centers to use seawater for cooling.
Meanwhile, Amazon.com Inc. (NASDAQ:AMZN) founder Jeff Bezos, along with Tesla Inc.‘s (NASDAQ:TSLA) Elon Musk, have touted placing data centers in orbit to harness limitless solar power.
While these long-term solutions are being developed, investors are focusing on the established power producers set to fuel the new AI world.
While the S&P 500, Dow Jones, and Nasdaq 100 closed in a mixed manner on Monday, the futures were lower on Tuesday.
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