According to a senior portfolio manager, electricity demand is an underappreciated story that is set to become the backbone of the modern economy. The argument is that if artificial intelligence is the next industrial revolution, then electricity is its fundamental fuel. An AI-driven economy will require immense computing power, which in turn demands a massive amount of electrons. This need for power generation and infrastructure is expected to drive annual electricity demand growth of 2% to 3%. Compounded over decades, this represents a significant and sustained increase.
One way to invest in this trend is through Constellation Energy, one of the largest independent power producers in the United States. A key advantage for the company is the location of its power generation facilities, which are situated near major data center hubs like those in Northern Virginia and Texas. Crucially, Constellation is also the largest producer of nuclear power in the country. Nuclear energy is seen as a vital component for the future because it can provide low-cost, reliable electricity, which will be essential for the U.S. to compete and win the global AI race.
A second pick is Cameco, a leading global provider of uranium. The importance of uranium is directly tied to the resurgence of nuclear power. As the demand for nuclear-generated electricity grows to meet AI’s needs, the demand for uranium will rise accordingly. While Cameco’s stock has seen substantial gains, the investment thesis is not simply a short-term commodity play. The company is securing long-term contracts tied to electricity demand, offering a way to invest in the AI theme without the high valuations of mega-cap tech stocks.
Finally, natural gas is also expected to play a critical role in meeting rising electricity demand. A major natural gas producer, EQT, is highlighted as a top way to invest in this segment. This recommendation was reinforced by a recent government announcement regarding a massive new natural gas power plant planned for Ohio, located near the Marcellus shale region. As one of the largest producers in that shale formation, EQT is well-positioned to supply the fuel for such projects, linking its success directly to the infrastructure build-out required for increased power generation.
