Entergy (ETR) is the latest utility play to be chosen by a tech giant to help power data centers and meet the steep energy needs of the artificial intelligence boom.
Meta Platforms (META) announced Wednesday plans to build a $10 billion artificial intelligence data center in northeast Louisiana. The project will be Meta’s largest data center, according to the Facebook-parent.
Entergy, one of the largest U.S. utilities, said it plans to bring online three new natural gas power plants to generate more than 2,200 megawatts for Meta’s data center over a 15-year period.
The Louisiana Public Service Commission is reviewing Entergy’s proposal amid pushes phase out fossil fuels, according to The Associated Press.
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Entergy stock gained 1.4% to 153.73 during market action on Thursday after advancing 0.2% on Wednesday. Meanwhile, Meta broke out of a flat base chart pattern with a 3.5% gain Tuesday, hovering in a buy zone. Shares closed at a record high 613.65 before Meta pushed higher briefly on Wednesday.
AI Powers Up Utilities
Fellow utility play Constellation Energy (CEG) reported better-than-expected third-quarter earnings and revenue while narrowing its 2024 profit expectations last month.
Vistra (VST) also topped third-quarter revenue expectations last month, giving initial 2025 guidance and announcing an additional $1 billion for its share repurchasing program.
Vistra and Constellation are both among the top S&P 500 stocks this year.
Meanwhile, Talen Energy (TLN) reported better-than-expected third-quarter earnings and revenue in mid-November while announcing it is “moving forward” with Amazon.com (AMZN) on “commercial solutions” in the aftermath of federal regulators recently rejecting a $650 million nuclear deal between Talen and Amazon.
Nuclear energy and utility-related stocks have broadly soared higher since Constellation Energy announced on Sept. 20 a two-decade contract with Microsoft (MSFT) to provide nuclear power for the tech giant’s data centers.
Entergy stock has advanced 19% since Sept. 20, part of a 50% gain on the year.
AI, Data Centers And Utilities
So far in 2024, utility and nuclear energy stocks have been riding the artificial intelligence energy wave.
Artificial intelligence — and the data centers powerful enough to allow the AI programs to “train” themselves — are expected to boost energy demand throughout this decade. In the U.S., McKinsey & Co. projects that data center energy demand will grow from around 4% currently, as a percentage of total energy demand, to 11%-12% by 2030.
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Many technology companies are investing in or partnering with nuclear power providers to ensure energy supplies for their data centers. However, natural gas is also a very attractive option, according to analysts.
Meta late Tuesday published a request for proposals for nuclear energy developers to provide one to four gigawatts of new nuclear generation capacity by the early 2030s.
“We believe that nuclear energy can help provide firm, baseload power to support the growth needs of the electric grids that power both our data centers (the physical infrastructure on which Meta’s platforms operate) as well as the communities around them,” Meta said in a blog post.
In October, Amazon.com and Alphabet (GOOGL) announced decisions to invest in developing the emerging small modular reactors, or SMRs, technology. No operating SMRs currently exist, but there are a number of companies developing the technology.
Oracle (ORCL) also announced plans in September to build a gigawatt-scale data center powered by three SMRs.
Meanwhile, Morgan Stanley analysts wrote that the Constellation-Microsoft deal “proves out the value of nuclear power for hyperscalers, with higher prices for future deals” for utilities.
Entergy stock has a 74 Composite Rating out of a best-possible 99. Shares also have an 88 Relative Strength Rating and a 57 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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