For Data Centers, Power is the New Real Estate (Literally) - motley-fool-money Recap

Podcast: motley-fool-money

Published: 2026-01-13

Duration: 23 minutes

Summary

Data centers are rapidly expanding, driven by the demands of AI and tech giants. The critical issues are not just in real estate but also in securing sufficient power supplies, with companies like Microsoft, Amazon, and Google turning to nuclear energy solutions.

What Happened

The episode dives into the growing importance of data centers, emphasizing how their expansion is fundamentally tied to power and real estate. With tech companies like Microsoft, Amazon, and Google rapidly building data centers, the demand for power has become as critical as the real estate itself. Anders Bylund highlights that despite fears of overbuilding, demand for data center capacity continues to outstrip supply, indicating a robust market for infrastructure investment.

Emily Flippen notes that CBRE reports show pre-leasing of data center capacity well into 2027, pointing to the long-term commitment of tech giants to this sector. The discussion reveals that energy consumption for data centers is projected to double by 2030, with AI-driven electricity usage in the U.S. expected to rise by 133%. This has led companies to take control of their energy sources; for instance, Microsoft and Amazon are investing in nuclear energy.

Bylund draws attention to Microsoft's recent deal to restart Three Mile Island and Amazon's purchase of a nuclear-powered campus, illustrating how tech companies are securing their energy futures. Flippen cites the critical bottleneck of energy in data center expansion, likening power to the new real estate for these hyperscalers.

The conversation also covers investment opportunities in the data center space, with Dan Caplinger mentioning REITs like Digital Realty Trust and Equinix as benefiting from the data center boom. These companies are diversifying and expanding their portfolios to capitalize on the growth in data center infrastructure.

Anders Bylund suggests Hewlett Packard Enterprise as a noteworthy player due to its significant role in supercomputing and its attractive valuation. HPE's involvement in the construction of high-powered systems for AI makes it a compelling choice for investors.

Emily Flippen shares insights on companies providing the essential infrastructure for data centers, like Aeon, which is involved in custom HVAC solutions critical for data center operations. The episode concludes with mentions of firms like Sterling Infrastructure and Comfort Systems, which are crucial in the development and maintenance of data centers.

Key Insights