How America's Data Center Boom Is Rewriting The Power Stock Playbook

America's data center boom is no longer just a tech story. It is becoming a defining force for utility stocks and grid-related investments, according to Goldman Sachs.

In 2025 alone, the U.S. added a record 10 gigawatts of new data center capacity, with December marking the strongest single month on record.

That surge helped push overall U.S. power demand growth to 2.8% year over year, the fastest pace in two decades. More than half of regional power markets are now operating at or near critical tightness.

For investors, that shift matters. Tight power markets tend to support higher pricing, stronger returns on regulated assets and rising capital spending across generation and transmission.

Data Centers Are Squeezing US Power Grids

The PJM Interconnection, the largest U.S. power market covering 13 states from Illinois to New Jersey, has been hit hardest.

It hosts the densest concentration of data centers in the world, particularly in Northern Virginia. In 2025, PJM reached "critical tightness," a technical condition where effective spare generation capacity dips below 15%.

“In the short term, tightening US power markets could slow data center expansions,” said Goldman analyst Hongcen Wei, in a note shared Wednesday.

In response, PJM trimmed its near-term power demand growth forecast for 2027–2029 from 3.5% to 3.1% annually.

Grid constraints and transmission bottlenecks are now slowing the approval pace for new data center loads, which had previously been growing rapidly.

But the structural drivers — cloud computing, AI workloads, electrification, EV adoption, and rising industrial demand — remain firmly intact.

White House Proposes Mandatory Auctions for Tech Firms

Policy risk is also entering the equation. President Donald Trump and several Northeastern governors unveiled a plan on Jan. 16 to compel major technology companies to participate in wholesale electricity auctions.

The proposed policy would require firms operating large-scale data centers to finance long-term contracts for new generation capacity, effectively tying expansion to grid support.

Wei said the cost math could shift. "While we believe this plan, if executed, could lead to increased costs for building and using data centers in PJM (and potentially in other regional power markets in the U.S. with similar plans), we expect limited impact on current and future data center additions and associated power demand growth," he said.

He tied that view to two drivers: "Power costs are not a primary driver for data center additions," Wei said, and "the growth in demand for data centers will continue to outpace that in supply," he said.

Stock Market Implications of Surging Data Center Power Demand

The explosion in data center-driven electricity consumption is reshaping U.S. power markets—and creating clear winners and risks across utilities, infrastructure stocks, renewables and Big Tech.

1. Utilities Tied to Growth Regions Could Benefit

Utilities with major footprints in Virginia, Texas, and Ohio stand to gain from higher electricity sales and grid expansion needs. Dominion Energy Inc. (NYSE:D) and American Electric Power Co. Inc. (NASDAQ:AEP) could see upside, despite higher infrastructure costs.

In addition, utilities with large nuclear fleets like Constellation Energy Corp. (NASDAQ:CEG) and Duke Energy Corp. (NYSE:DUK) also sit at the high end of the value chain as data centers demand always-on, carbon-free power.

2. Grid Infrastructure Names in the Spotlight

With PJM bottlenecks mounting, power grid investment is poised to rise. That's positive for names like Quanta Services Inc. (NYSE:PWR), Eaton Corp. (NYSE:ETN), and Schneider Electric SE (OTC:SBGSF), which supply key transmission and power systems.

It also lifts behind-the-meter power providers like Bloom Energy Corp. (NYSE:BE). Bloom's on-site fuel cells allow data centers to secure power without waiting for grid approvals.

3. Renewables May Ride New Policy Tailwinds

Trump's proposed power auction reform could spur demand for clean energy. NextEra Energy Inc. (NYSE:NEE) and Brookfield Renewable Corp. (NYSE:BEPC) are well-positioned to capture long-term contracts as utilities and tech firms seek scalable, green capacity.

It also strengthens the role of nuclear as a clean baseload that can anchor renewable-heavy systems, favoring uranium suppliers such as Cameco Corp. (NYSE:CCJ), which benefit from higher long-term nuclear fuel demand.

4. Data Center REITs Face Higher Costs, But Still Strong Demand

Rising power costs and grid constraints could pressure operating expenses for data center landlords in PJM-heavy regions. Still, demand remains far stronger than supply.

Equinix Inc. (NASDAQ:EQIX) and Digital Realty Trust Inc. (NYSE:DLR) control prime assets in Northern Virginia, where scarcity supports pricing power.

5. Big Tech May Spend More—But Balance Sheets Are Strong

If required to help fund grid upgrades, firms like Alphabet Inc. (NASDAQ:GOOGL), Amazon.com Inc. (NASDAQ:AMZN), and Microsoft Corp. (NASDAQ:MSFT) could see higher energy-related capex. Still, their scale limits financial risk.

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