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According to TD Cowen analysts, these stocks are ahead of the curve as the data center industry boom is causing a power shortage.

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The rapid growth in data centers, fueled by AI-driven demand and increasing electric vehicle adoption, is leading to power supply bottlenecks in major markets as electricity demand skyrockets. Analysts at TD Cowen have identified several stocks that are well-positioned to benefit from this trend. Northern Virginia, the world’s largest data center market, is projected to run out of reliable power in 2027, while Silicon Valley is expected to face shortages by 2034. Despite the challenges, companies like Amazon and Oracle are taking proactive steps to secure the power needed to support AI workloads.

One of the stocks highlighted by TD Cowen is Digital Realty Trust, a global data center operator. As data center leasing rates increase and power constraints become more pronounced, Digital Realty stands to benefit from the growing demand. The company’s large footprint and ability to host AI workloads make it an attractive option for hyperscalers and enterprises looking to move latency-sensitive workloads. Another beneficiary of the data center boom is Brookfield Renewable Partners, which has partnered with Microsoft to develop renewable energy capacity to support data centers.

NuScale Power Corporation, a leader in small modular reactor design, is also identified as a top pick by TD Cowen. Nuclear power, particularly small modular reactors, is seen as a viable solution to meet the increased electricity demand in an environmentally friendly manner. Energy companies like Coterra, an exploration and production company, are poised to benefit from the surge in electricity demand as well. Coterra’s ability to navigate commodity price volatility and invest in high-return wells positions it well to take advantage of the increasing demand for natural gas to power data centers.

Overall, the rise in data center demand and the resulting power constraints present a significant opportunity for companies in the energy and technology sectors. By investing in stocks like Digital Realty, Brookfield Renewable Partners, NuScale Power Corporation, and Coterra, investors can potentially capitalize on the growing power supply bottlenecks and benefit from the booming data center industry. As companies continue to adapt to the evolving landscape, these stocks are likely to see continued growth and profitability in the years to come.

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