It takes more than financials to invest your money where the puck is moving.

You must pair fundamentals with a top-down view because innovation matters, the economy matters, and geopolitics matters.

And booming energy demand to feed the AI beast is one puck every trader and investor must keep in view.

Every three days a new data center opens up somewhere in the world—with many classified as hyperscale.

Just look at Microsoft Corp’s (NASDAQ: MSFT) Stargate project, a $100 billion data center built exclusively to house a supercomputer for OpenAI. Once up and running, it will consume 100% of the electricity output of a large nuclear plant.

And that demand is putting a strain on the cornerstone of the modern economy—energy.

Straining the Grid

In Kansas City, a data center and an electric vehicle battery factory under construction are consuming so much energy that local providers have delayed the closure of a coal-fired power plant to meet the demand.

In Virginia, the world’s largest data center hub, Dominion Energy had to pause new data center connections temporarily due to surging demand.

In Baltimore County, power grid authorities have claimed eminent domain to install a 500,000-volt transmission line to address significant system overloads.

By 2030, AI data centers are projected to consume between 4.6% and 9.1% of the total US electricity generated.

That boost in demand from AI data centers, along with continued adoption of EVs, will take overall annual load growth from an average of less than 1% over the past 10 years to between 2.6% and 4.7%, according to the NERC.

Source: NERC

That’s a three-to-sixfold increase in the annual growth rate of total power demanded in the U.S. by the end of the decade.

And it’s not just here.

Sweden’s data center power demand will double over the next decade, while the demand in the U.K. could leap sixfold.

Globally, the International Energy Agency (IEA) predicts that the energy demand from data centers could double by 2026.

To keep the lights on and the economic engine running, we’ll need every source of power we can get.

Including a for-the-moment forgotten-about sector, oil and gas.

Still Waters, Deep Opportunity

Among all major U.S. sectors, oil and gas stocks carry the cheapest valuations.

Source: ISS Investor Express, The Capital List

Big tech took the lead with all the interest in AI.

And the sideways price of oil and natural gas over the past two years has taken attention away from the sector.

However, I view the current discount of oil and gas companies as an opportunity to get in on inevitable energy bottlenecks.

Not only do you have insatiable power demand from AI. Auto demand has shifted back to gas-powered vehicles. That will only accelerate once data-center power demand puts the squeeze on electricity rates.

We’re also just one surprise away from the Israel and Iran fracas creating the biggest oil shock in history.

And with Trump promising to clear the regulatory road for the U.S. energy sector, there are plenty of factors at play to push oil and gas prices higher.

Now, I wouldn’t recommend running out and buying energy stocks willy-nilly.

But there’s a handful of Exploration and Production companies with stable and improving profitability and low leverage on which you can train your focus.

I’m working on a report now and will have a breakdown of that opportunity for you in an upcoming Capital InFocus report.

Meanwhile, check out my Capital InFocus report on NVIDIA.

And no matter how choppy markets get from here, don’t let it take your eye off the puck.

Think Free. Be Free.

Don Yocham, CFA

Managing Editor of The Capital List