The data center boom is leading to a power crunch. These stocks are ahead of the curve, TD Cowen analysts say

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United States,Environment,TD Synnex Corp

Following a decade of flat load growth, artificial intelligence data centers and electric vehicles are driving an acceleration in electricity demand.

Several stocks are well-positioned to benefit from any power supply bottlenecks resulting from rapid growth in data centers, according to 11 analysts at TD Cowen who compiled a 169-page report. Following a decade of flat U.S. electricity load growth, generative artificial intelligence-driven data center demand and increasing electric vehicle adoption are driving a staggering acceleration in electricity demand, TD Cowen's Michael Elias wrote in the report published Tuesday.

"To that point, we have witnessed a surge in demand associated with data centers, which Digital Realty has been the beneficiary of as evidenced by its record 1Q24 bookings of $252.1 that meaningfully surpassed its prior record leasing levels." Digital Realty shares are up 6.7% this year, and analysts polled by FactSet think the stock can gain almost 3% from Tuesday's close.

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