The nuclear-powered AI data-center trade roars into a new year
It’s early going, but so far the trade of the year is clearly another big bet on an ongoing boom in an AI-related investment.
Just check out the top gainers of the S&P 500 in the first two days of 2025 trading.
Nuke stocks Vistra and Constellation Energy — the second- and 10th-best peformers in the index last year — exploded out of the gates amid rising expectations of growing demand from power-hungry data centers.
Giant landowner Texas Pacific Land, which traditionally leased its massive holdings of West Texas land for oil and gas drilling but has recently talked up the potential for slapping up data centers, comes next.
Then embattled server-hardware maker Super Micro Computer, another nuke stock NRG, the Magnificient 7’s Nvidia, renewables and power-generation firm GE Vernova, disk-drive maker Western Digital, a newly enlivened Uber, and finally Micron. We could go on, with the next tier of top performers including more tech, AI, and energy-related firms like First Solar, Enphase Energy, and Palantir.
For what it’s worth, there are plenty of reasons to believe that this bet on the continued boom in AI investment is pretty much a sure thing.
For instance, Friday Microsoft said it was going to spend $80 billion to build AI data centers in fiscal 2025 alone. That can buy a lot of chips.
But from a slightly longer-term perspective, nervous Nellies can’t help but wonder whether such a single-minded investment mania might be setting up the US economy — and potentially the markets — for the mother of all malinvestment cycles, akin to or perhaps worse than the tech-stock boom of the late 1990s that turned into a gnarly stock-market bust by 2001. But that’s all ancient history.
This time is, of course, completely different.
