AI Spending Explodes
In March 2023, Microsoft (MSFT) founder Bill Gates wrote, “In my lifetime, I’ve seen two demonstrations of technology that struck me as revolutionary.” Gates, writing on his website, referred to the graphical user interface he witnessed in 1980, which would eventually be the ingredient needed for every modern operating system, including Windows. The second technological innovation that Gates referred to was OpenAI’s large language model (LLM) powered Chatbot, ChatGPT. Gates had asked his contacts to train the model to take and pass an AP Bio exam (Picking AP Bio because it required deep analysis, not simply memorization of facts). To his surprise, OpenAI’s ChatGPT did not only pass the 60-question multiple choice exam, but also answered 59 of the 60 questions correctly.
Though large language models like ChatGPT are still being refined and “trained,” it is becoming abundantly clear to the world’s sharpest technologists that the next wave of innovation and growth can be harnessed through artificial intelligence. That’s why cash-rich “Magnificent 7” tech juggernauts like Meta Platforms (META) and Microsoft are spending billions of dollars on Nvidia (NVDA) chips and data centers to gain AI supremacy. According to IDC Research, worldwide AI spending will more than double by 2028 to a mind-numbing $632 billion, resulting in a compound annual growth rate (CAGR) of ~29%.
Data Center Energy Consumption Projections
Currently, AI is dominated by Mag 7 names due to the startup costs, such as GPUs and data centers, which are astronomical. However, the spending doesn’t stop once a data center is constructed. Data centers require massive quantities of electricity. In December 2024, the US Department of Energy (DOE) released a report stating that data center energy usage will “double or triple by 2028” (after doubling over the past decade. With an already vulnerable and overworked energy grid, big tech companies will be forced to source their own energy needs. Below are two reasons the energy sector is in the “sweet spot” over the next four years:
· Supply & Demand: The US electric grid is near capacity, and The Electricity Reliability Council of Texas (EROC) was even forced to pay Bitcoin miner Riot Platforms (RIOT) more than $30 million to limit its electricity usage during a recent heat wave. Meanwhile, demand from data centers is increasing rapidly.
· Regulatory-Friendly Environment: Last night, President Donald Trump wasted no time rolling out his energy-friendly agenda. Trump immediately declared a “National Energy Emergency” via an executive order that details the nation’s “inadequate energy supply and infrastructure.” In this executive order, Trump will ease restrictive regulations for energy producers.
Below are three stocks that will benefit from the energy sweet spot, including:
1. OKLO: The Leading Nuclear Momentum Stock
OKLO Company Overview
Oklo (OKLO) is an advanced nuclear technology company that develops and deploys small modular reactors (SMRs). Their technology aims to provide clean, safe, and affordable energy by using advanced reactor designs. Oklo’s reactors are designed to be more efficient and safer than traditional nuclear power plants, addressing concerns about nuclear waste and safety.
Best-in-Breed Management Team
Oklo’s board of directors has prominent connections in the AI industry and Washington. Sam Altman, CEO of OpenAI, is the OKLO chairman and an investor. Meanwhile, Donald Trump tapped formed Oklo board member Chris Wright to lead the US DOE. These connections should provide Oklo with an advantage over its competitors.
OKLO: Momentum and Relative Strength
Though OKLO has yet to produce revenue, investors are betting that lucrative data center deals compensate for any short-term concerns. OKLO shares are up ~150% over the past year and recently retreated for the first time to the 50-day moving average and found buyers – a bullish sign.
Image Source: Zacks Investment Research
2. CEG: Growth Through Acquisition
CEG Company Overview
Zacks Rank #1 (Strong Buy) stock Constellation Energy (CEG) is a leading American energy company that provides electricity, natural gas, and energy management services. CEG is a significant producer of clean energy, particularly nuclear power, and they are working to expand their renewable energy portfolio.
Calpine Acquisition is a Major Bull Catalyst
Earlier this month, news broke that CEG agreed to acquire Calpine Corp. for $16.4 billion to add scores of power generation assets across the US as the nation’s electricity demand is forecast to surge. Not only will the deal help CEG benefit from soaring AI data center demand, CEG will also get a very lucrative deal on Calpine. CEG paid just 7.9x 2026 earnings, and the deal is seen as 20% accretive to EPS.
Another sign that the deal is a game changer for CEG is the price action. Usually, the acquiring company’s stock falls initially on acquisition news. However, in CEG’s case, shares bolted more than 20% on massive volume.
Wall Street Analysts are Bullish on Constellation Energy
A bullish sign for CEG shares is that Wall Street analysts are becoming more bullish on the stock, with several analysts tracked by Zacks raising earnings estimates over the past two months.
Image Source: Zacks Investment Research
3. BE: Serving the Here and Now
BE Company Overview
Bloom Energy (BE) leverages natural gas and other fuels to create electricity through chemical reactions. BE’s technology helps data center operators and other businesses generate their own clean energy without needing to rely on the traditional electrical grid.
Mega-Deal Injects Life into Bloom Energy
On November 15th, BE shares skyrocketed some 59% after the company announced a mega deal to supply up to 1 gigawatt of fuel cells to electricity utility American Electric Power. AEP will deploy fuel cells to AI data centers with the potential for more orders in 2025. On the back of the deal, shares are setting up in a rare but powerful high-tight flag pattern.
Image Source: TradingView
Bottom Line
With the convergence of the AI revolution and a new administration in Washington, OKLO, CEG, and BE shares have the potential to soar.
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Oklo Inc. (OKLO) : Free Stock Analysis Report
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