Elon Musk's AI Data Centers Need So Much Power He's Buying Gas Turbine Companies -- Who Else Benefits?
Investors are in good company when they buy into the thesis that rising demand for power for AI data centers will continue to benefit GE Vernova over the long term.
Overview
The greatest bottleneck to the build-out of artificial intelligence (AI) infrastructure isn't chips; it's power, at least according to Elon Musk. Indeed, as if to prove the point, Musk's company, Space Exploration Technologies, recently bought APR Energy, a company that delivers power to data centers, utilities, and industrial companies, for $1 billion. The acquisition highlights that power demand exceeds supply, and that's great news for companies that benefit from increasing use of gas to power AI data centers.
The principle of demand/supply dynamics shifting a company's prospects is perfectly encapsulated in GE Vernova (NYSE: GEV). A few years ago, when the company's operations were part of the former General Electric, there were real questions about the long-term growth rate potential of gas turbines (GE Vernova's key product) due to the rise of renewable energy. In addition, electrification infrastructure was also seen as a low-growth industry reliant on maintenance capital spending for the developed world's mature electricity network.
Details
Fast-forward to 2026, and the surge in demand for power has fundamentally changed its business. The chart of its backlog, or remaining performance obligations (RPO), shows growth in recent years, indicating strong end demand, and management believes its RPO will reach $200 billion in 2027.
Source
Originally published at www.fool.com.