SpaceX is one of a host of potential beneficiaries identified by Morgan Stanley as ways to play the intensifying AI power shortage Amid skyrocketing demand for computing power and data-center capacity, the U.S. is facing a severe and growing power shortfall. And a new analysis shows the electric grid may be even less equipped to handle the load than the industry previously thought. Data centers are becoming more efficient at providing computing power and moving more quickly than the grid can service.
Morgan Stanley analyst Stephen Byrd wrote in a Monday note that he expects a U.S. power shortfall of 33 gigawatts, which equates to 34% of chip demand, through 2028. Though that’s excluding “time-to-power” solutions, like off-grid power, which bypass grid-connection delays. Don’t Short Yourself offers weekly money tips to help you earn it, stack it and grow it.
I would like to receive updates and special offers from Dow Jones and affiliates. I can unsubscribe at any time. But in the massive potential power shortfall lie ample opportunities for investors, according to Byrd.
One class of companies that stands to benefit from the crunch are powered shell providers, or companies that can repurpose their power grids to build data centers. He recommends Cipher Digital , Hut 8 , Riot Platforms , Galaxy Digital and Terawulf , saying that he expects each of these companies to sign at least one significant data-center lease within the next six months. Freedom Capital Markets analyst Paul Meeks told MarketWatch that the supply-and-demand gap for power, while “already wide,” could get “desperately worse” if power becomes even scarcer.
And that scenario could boost the stocks of companies including Cipher Digital, Terawulf and Hut 8, which have secured power agreements for data centers, he noted. **Read more:**The old new thing: Cisco and retro tech are back and forming the AI buildout’s backbone Power-generation equipment is another compelling investment area, according to Byrd. He said he expects a “surge” in demand for products catering to “behind-the-meter” power generation, which allows energy-intensive facilities like data centers to store electricity on-site, as opposed to relying on the public grid. Byrd recommends Bloom Energy , GE Vernova and Cummins .
He expects there to be a number of “behind-the-meter” power generation deals in the coming months, especially in West Texas. He also anticipates that companies involved in project development of behind-the-meter systems will see a flurry of transactions with data-center developers and AI companies. Those include Solaris Energy Infrastructure and Vistra .
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