3 Energy Stocks to Buy Amid an AI Electricity Surge

  • Here are just a few top energy stocks to buy and hold today.
  • Digital Realty Trust (DLR): With a yield of 3.36%, the REIT owns data centers around the world. All of which are seeing substantial demand with the AI boom.
  • First Solar (FSLR): UBS analysts just reiterated a ‘buy’ rating, with a price target of $270, noting FSLR is ‘an overlooked, direct beneficiary.’
  • Enbridge (ENB): Enbridge is well positioned to serve this increased demand through the vast footprint of our assets connected to key supply basins.
Energy stocks to buy - 3 Energy Stocks to Buy Amid an AI Electricity Surge

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With growing, explosive demand for artificial intelligence, electricity demand could double by 2030, according to the Electric Power Research Institute. All of which is creating a big opportunity for some of the top energy stocks to buy.

They added that AI queries “require approximately ten times the electricity of traditional internet searches and the generation of original music, photos, and videos requires much more.”

According to the World Economic Forum, to achieve a tenfold improvement in AI model efficiency, the computational power demand could surge by up to 10,000 times. Since the energy required to run AI tasks is already accelerating with an annual growth rate between 26% and 36%, by 2028, AI could be using more power than Iceland used in 2021.

In addition, according to Tesla (NASDAQ:TSLA) CEO Elon Musk, we could see an electricity shortage. “Next year, you will see that they just can’t find enough electricity to run all the chips,” he said, as noted by Barron’s.

With heavy demand, it just makes sense to pay attention to energy stocks to buy.

Digital Realty Trust (DLR)

Dark server room that's illuminated by blue lights and features numerous rows of server units
Source: Shutterstock

Look at Digital Realty Trust (NYSE:DLR), for example. With a yield of 3.36%, the real estate investment trust owns data centers around the world. All of which are seeing substantial demand with the AI boom. 

According to Goldman Sachs, data center demand is expected to rise at a 15% CAGR between now and 2030. Jones Lang LaSalle CEO Christian Ulbrich says there’s soaring demand for data centers with AI. 

“AES, a Virginia-based utility, recently told investors that data centers could comprise up to 7.5% of total U.S. electricity consumption by 2030, citing data from Boston Consulting Group,” as noted by Barron’s.

From its last traded price of $143.04, I’d like to see the DLR REIT initially retest $150.

First Solar (FSLR)

Person holding smartphone with logo of US renewable energy company First Solar Inc. (FSLR) on screen in front of website. Focus on phone display. Unmodified photo.
Source: T. Schneider / Shutterstock.com

Over the last few weeks, shares of First Solar (NASDAQ:FSLR) exploded from about $180 to a high of $286.60. And while the solar giant is a big overbought here, it could test higher highs.

UBS analysts just reiterated a “buy” rating. With a price target of $270, they noted FSLR is “an overlooked, direct beneficiary.”

As noted by Barron’s, “There’s a direct line from artificial intelligence to First Solar.” They also noted “how a reply from AI uses about 10 times more electricity than a typical Google search. ‘Under 100% Renewable’ sustainability policies the large tech companies match their nonrenewable electricity consumption through Power Purchase Agreements (PPAs).”

Analysts at Piper Sandler also raised their target on FSLR to $219, with an “overweight” rating. In addition, as noted by CNBC, AI uses 10 times more electricity than traditional Google searches.

Enbridge (ENB)

Enbridge (ENB) sign on the head Enbridge office in Toronto, Canada.
Source: JHVEPhoto / Shutterstock.com

After pulling back from about $37.44 to $35.60, Enbridge (NYSE:ENB) bottomed out, and is just starting to pivot higher. From its last traded price of $36.43, I’d initially like to see ENB retest $40 a share. Plus, while we wait for ENB to push higher, we can collect its yield of 7.33%.

Power demand for artificial intelligence should help fuel a good deal of momentum. 

“The build out of data centers and generative AI is forecasted to require a material increase in power generation. This new power generation will be fed by a combination of natural gas and renewables and supports our view that the world needs all forms of energy. As the sector evolves, Enbridge is well positioned to serve this increased demand through the vast footprint of our assets connected to key supply basins,” as noted by company CEO Greg Ebel.

Moving forward, the company expects to see even bigger demand from power-hungry data centers fueling an unstoppable AI boom.

On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.


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