Investment Opportunities: Long-term AI Stocks to Pursue over the Next Ten Years
In the rapidly evolving world of technology, the demand for electricity is set to surge significantly due to the growth of Artificial Intelligence (AI) and data centers. This escalating electricity demand presents both challenges and opportunities for utility companies.
Nvidia, a key player in the AI industry, reported a 69% year-over-year increase in revenue for its fiscal first quarter 2026, with data centers being the primary driver of this performance. The company also saw a 12% sequential revenue growth. However, the stock's impressive performance over the past five years, with a rise of over 1,400%, suggests that much of the good news may already be priced in.
The demand for electricity by AI and data centers is forecasted to increase by 300% over the next decade. This surge is fueled by the rising adoption of AI workloads requiring massive computational power. AI servers are projected to consume around 500 terawatt-hours annually by 2027, representing a 160% increase from 2023 levels. Data center demand driven by AI is expected to grow at about a 20% compound annual growth rate (CAGR) through 2030, with over 100 GW of new data center capacity anticipated in North America alone.
This escalating electricity demand poses challenges for utility companies. The rapid increase in data center power needs calls for substantial grid capacity expansion and modernization to maintain reliability, particularly as AI workloads demand continuous high performance and low latency. This strains existing infrastructure, such as transformers and power distribution.
However, utility companies can capitalize on this growing demand. Utilities can benefit from increased electricity sales driven by AI operations. Furthermore, integrating AI with renewable energy sources (solar, wind) and smart grid management improves grid efficiency and balances supply and demand effectively. Companies like NextEra Energy, with large renewable portfolios, and Brookfield Renewable Partners are well-positioned to leverage this growth by providing clean energy to power AI data centers, aligning with the trend toward green AI data centers.
NextEra Energy, a utility company, could be a safe play for investors due to the expected growth in electricity demand for AI and data centers. The company owns one of the largest regulated utilities in the United States and one of the world's largest clean energy businesses. It has increased its dividend at a compound annual rate of 10% over the past decade, offering an attractive 3.1% dividend yield.
Brookfield Renewable Partners, not a regulated utility, can sell power to any company anywhere in the world due to its diversified portfolio of renewable energy assets. The company recently inked a deal with Microsoft to provide 10.5 gigawatts of power to the tech giant for its data centers. With a huge 5.7% yield, Brookfield Renewable Partners presents an attractive investment opportunity.
Another company to watch is NuScale Power, which is working to build small modular reactors (SMRs) that can be placed near where power is needed, like for an AI data center. Once NuScale Power secures its first customer, it is likely that additional customers will follow.
AI is a young industry, and it's difficult to predict which companies will be the long-term winners, including Nvidia and Palantir Technologies. However, one thing is certain: the future electricity demand increase from AI growth is expected to be very significant, and utility companies that can adapt and capitalize on this trend will be well-positioned for success.
