Trump says Big Tech needs to bring its own power. These stocks benefit
The artificial intelligence industry’s data centers have stirred up enough political controversy to warrant a mention in the President’s State of the Union address. President Trump said in his speech Tuesday that he has secured a pledge from the big technology companies to supply their own power for energy hungry data centers. Managers from Amazon.com , Google , Meta Platforms , Microsoft , xAI, Oracle and OpenAI will meet Trump at the White House on March 4 to sign the pledge, a White House official told CNBC on Wednesday. Details of the agreement are scarce. It is unclear if the tech companies have agreed to any binding commitments that will change the status quo. Data center developers are already investing in new power capacity, but new supply is not keeping up with growing demand. “The states have already taken that initiative to say, if data centers come on, they’re going to pay their fair share, and they have to bring some generation,” Shar Pourreza, head of North American power at Wells Fargo, told CNBC. Trump “is only echoing what the states are already doing.” Juno Beach, Florida-based NextEra Energy , for example, is planning to build 15 gigawatts of new power for what CEO John Ketchum has described as data center hubs. NextEra is the largest developer of renewable energy in the U.S., but the power company is planning to pivot more toward gas generation, one of the Trump administration’s preferred energy sources. It plans to build four to eight gigawatts of gas generation by 2032. Data center politics Trump’s data center pledge may have more to do with the politics of the looming mid-term elections, and an effort to convince voters that the administration is taking action to address rising electricity prices. Data centers are facing political blowback across the U.S. as people blame them for high utility bills. “He’s trying to bridge his views and his policies around AI with affordability, because clearly affordability is a big part of the campaigning for Democrats,” Pourreza said. Still, Trump has unique political influence and leverage that could move the tech and utility industries to do more. The president has closely embraced AI as an engine of economic growth, a pillar of national security in the contest with China and has tried to prevent states from regulating it. With AI as in other businesses, Trump frequently uses the White House bully pulpit to compel companies to do what he wants. “We’ve clearly seen this is a maximalist policy administration,” said Abe Silverman, who served as general counsel for New Jersey’s public utility board from 2019 until 2023. “There are reasons to think that this administration will be able to assert its will more directly than past administrations.” While details are still pending, Trump’s announcement Tuesday reflects an emerging consensus across the country that data centers have to pay their portion of added infrastructure costs. Politics are unlikely to slow down the data center buildout, Pourreza said. Wells Fargo sees the U.S. facing a net negative power supply as early as 2029 as demand rises and some older power plants are retired, he said. Already, electricity “is a hyper tight market,” the analyst said. The lack of any surplus power will benefit both regulated utilities and unregulated independent power producers as hyperscalers — giant cloud service providers operating massive, globally-distributed data centers — contract for new generation, Pourreza said. Stock picks Wells Fargo named Baltimore-based Constellation Energy as its top pick among independent power producers. Constellation operates the largest nuclear power fleet in the U.S., which is especially attractive to tech companies seeking reliable, clean power for their data centers. Constellation completed its acquisition of Calpine in January, adding a large natural gas fleet to its portfolio. Gas and nuclear are both Trump administration priorities. Wells has a 12-month price target of $460 per share on Constellation, suggesting about 40% upside from Wednesday’s close. Wells also has the equivalent of buy ratings on independent producers NRG Energy , Talen Energy and Vistra . The Wall Street bank sees 12% upside for NRG (price target $206), nearly 30% upside for Talen ( $506) and 34% for Vistra ($236). Wells expects Constellation to announce another agreement with a data center in the coming weeks. Vistra is also having discussions with potential customers. “Everyone’s raising their earnings growth rates, everyone, and that’s because of the [number] of data centers that are coming,” Pourreza said. “I don’t see any slowdown.” “I think a lot of this is rhetoric,” he said of growing political controversy around data centers.
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