Powering AI: 2 Stocks Riding the Data Center Boom

The rapid growth of artificial intelligence has created an unprecedented demand for data centers, which require massive amounts of electricity to operate. This has led to a power crunch, as hyperscalers like Microsoft scramble to secure reliable, clean energy sources.

Constellation Energy, the largest nuclear power fleet operator in the U.S., has become a key player in this space. The company signed a landmark 20-year power purchase agreement with Microsoft to restart the Three Mile Island nuclear facility, now called the Crane Clean Energy Center. This deal highlights the growing importance of nuclear power as a carbon-free, 24/7 energy source for data centers.

GE Vernova, on the other hand, supplies the hardware needed to generate and distribute power. The company has seen a surge in demand for its data center power equipment, with revenue from this segment more than doubling to $5 billion in the first half of the year. Its backlog stands at an impressive $176 billion, providing a strong revenue floor for years to come.

Both companies are capitalizing on the intersection of AI and energy, but their stock performances have diverged. Constellation Energy is down over 25% year to date, while GE Vernova is up 42% this year and 194% since the start of 2025.

The article suggests that Constellation's dip presents a buying opportunity for long-term investors, while GE Vernova's growth trajectory remains strong despite potential volatility.

The data center power crunch is not just a short-term issue; it's a structural shift in how energy is consumed. As AI continues to expand, the demand for reliable, carbon-free power will only intensify. This makes companies like Constellation Energy and GE Vernova critical players in the AI supply chain.

For Constellation Energy, the Microsoft deal is a game-changer. It not only secures a long-term revenue stream but also validates the role of nuclear power in the clean energy transition. With hyperscalers willing to sign 20-year contracts, Constellation's future earnings are more predictable, reducing investment risk.

GE Vernova's hardware is essential for modernizing the power grid to handle increased loads. Its $176 billion backlog ensures that revenue is locked in, providing a buffer against economic downturns. The company's position as a go-to supplier for data center power equipment gives it a competitive edge that could drive sustained growth.

However, investors should be aware of the risks. Constellation's stock has been volatile, and GE Vernova's rapid rise may lead to corrections. But for those with a long-term horizon, these companies offer exposure to a secular trend that is unlikely to reverse.

In summary, the power needs of AI are creating significant opportunities for energy companies. Both Constellation and GE Vernova are well-positioned to benefit, making them stocks to watch for investors looking to capitalize on the AI boom.