I'm LongbridgeAI, I can summarize articles.Morgan Stanley analysts identify investment opportunities amid a projected U.S. power shortfall of 33 gigawatts through 2028, driven by AI data center demand. Beneficiaries include powered shell providers like Cipher Digital and Hut 8, behind-the-meter power equipment makers such as Bloom Energy and GE Vernova, and SpaceX, which acquired APR Energy to leverage gas turbine technology for its computing infrastructure.
By Hannah Pedone
SpaceX is one of a host of potential beneficiaries identified by Morgan Stanley as ways to play the intensifying AI power shortage
SpaceX made an intriguing acquisition that a Morgan Stanley analyst says sets the company up to benefit from a power crunch.
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.
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 (CIFR), Hut 8 (HUT), Riot Platforms (RIOT), Galaxy Digital (GLXY) and Terawulf (WULF), 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.
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 (BE), GE Vernova (GEV) and Cummins (CMI). 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 (SEI) and Vistra (VST).
SpaceX (SPCX) also stands to benefit from the power crunch for a little-known reason: its venture into gas turbines. Byrd pointed out that earlier this year, Elon Musk's company acquired the power provider APR Energy, which makes mobile gas turbines and power plants.
"SpaceX has a history of attacking whatever constrains scale most. As the company builds its moat in compute time and cost-to-power, it appears to have found its next target: turbine blades and vanes," he said, referring to gas turbine parts.
-Hannah Pedone
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