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What we heard from energy stakeholders
Focused on rapid growth of hyperscalers.
I have summarized the thoughts of investors in one sentence. The pace of spending on AI is so ferocious that the Energizer Bunny looks lazy. This growth is being driven by “hyperscalers,” which is just a fancy term for big tech companies that are rapidly ramping up their investments in artificial intelligence.
This weekly energy intelligence article is about artificial intelligence. Because, in this author’s rather humble opinion, there is no story of AI without energy. AI requires large amounts of computational power (“computing”), and computing requires large amounts of electricity. In other words, say it with me. AI is power. literally.
As long as AI spending remains on track, it seems logical that energy investment will increase along with it. As we emerge from the new revenue cycle, three things are clear.
1. Energy revenues remain very strong
2. AI-related capital investment is a big part of the story
3. See 1 and 2
The BNP Paribas team said:
“Capex for AI hyperscalers continues to be revised upwards. In line with issuer guidance in the first quarter earnings season, the estimated 2026 capex is now $725 billion, nearly double since mid-2025. Capex is growing faster than OCF (operating cash flow), driving funding demand.”
It’s hard to figure out the numbers. BNP Paribas highlights that the consensus forecast for capital spending a year ago was “only” $365 billion. This means this year’s projected capital spending of $725 billion is nearly double last year’s forecast.
When was the last time a major estimate nearly doubled in a year?
Put into perspective the $725 billion increase in AI spending.
At $725 billion, it exceeds the total GDP of mid-sized European countries and is approximately 1.5 times the size of Singapore’s economy.
At $725 billion, it’s roughly the same size as JPMorgan Chase & Co.’s market capitalization. That’s only about $125 billion less than ExxonMobil’s entire value and twice what Chevron is worth.
$725 billion is more than three times the value of all NFL teams combined (see CNBC’s exclusive NFL valuation analysis here).
Other numbers may be displayed. Each company has its own estimate. But they’re all very bullish. For example, UBS sees close to $5 trillion being spent, but that only applies to the power side. They write:
“Overall, $511 billion will be spent on adding generation capacity at a 3% (compound annual growth rate) by 2030, which does not include transmission and distribution enhancements.”
UBS believes that if this type of spending continues, both natural gas and solar power will remain “sold out”.
Evercore ISI is even more optimistic, projecting approximately $800 billion in spending, most of which Alphabet (GOOGL)Microsoft (MSFT), Meta (META), Amazon (AMZN), Oracle (ORCL).
No matter how big the final number is, like $700 billion or $800 billion, it’s a huge number.
Conclusion: While we are living history, we rarely realize that we are creating it. This, my friends, is history. It is produced in real time.
I remember when I started in this business, when the internet was just growing. Companies come in and companies go out, but this investment cycle is real and beautiful. But remember, as with most Wall Street history, there are winners and losers. Some stocks win big, and some stocks fail.
Stay focused. Watch CNBC and keep reading. And enjoy the ride.
Take Action → So how can you invest in and around this massive AI capital investment cycle?
Of course, one option is to invest in hyperscalers themselves. Names of super mega caps in which you may have already invested.
The other is to look at the companies that provide the power to make all these AI dreams a reality. One of them is Hut 8 (HUT). The Miami-based energy infrastructure company continues to generate huge profits for investors. Last week, Hut8 closed a $9.8 billion deal, sending its stock price soaring. We spoke to CEO Asher Genoot about this massive deal. You can view its contents here.
Analysts covering Hut8 have a price target of $118.13.
Another example is small-cap Fluence Energy (FLNC). The energy storage and battery company narrowed its losses and signed supply deals with two major hyperscalers. This news triggered shorts to cover the stock and the stock price soared. The stock price doubled in one week.
But investors are paying attention. The stock is currently above Wall Street analysts’ current 12-month price targets.
UBS favors companies that benefit from all this spending in other ways. The company’s analysts believe Eaton (ETN) and Brazil-based WEG (WEGE-BR) have “tailwinds” from expected additional power generation. The company also believes companies involved in power-saving solutions, such as Johnson Controls (JCI) and Trane Technologies (TT), should also benefit.
Not just stocks. BNP Paribas has some interesting ways to participate in the bond and credit markets. They believe parts of Taiwan’s investment-grade bond market should benefit.
The Paris-based company said: “The AI cycle has been an economic tailwind for Taiwan, with GDP growth of +14%. We believe some of the revenue growth has been reallocated to life insurance policies, ultimately driving overseas demand for long-term $IG credits.”
More specifically, the firm offers three trading ideas for clients, recommending an overweight in dollar-based high-yield AI infrastructure bonds, investment-grade banks, and investment-grade telecoms.
Now, pour the oil. Considering all of the above, it is important to always pay attention to what Wall Street is saying about prices, as at least as of this writing there is no meaningful peace deal between Iran and Trump, with the ceasefire being “on life support.”
JPMorgan Commodities Analyst Natasha Kaneva highlights the recent big changes in oil inventories. Kaneva points out how oil stocks surged during the coronavirus lockdown, reversed with Russia’s invasion of Ukraine, and reversed again in 2024 and 2025. This is not so much a history lesson as it is an explanation of why oil prices did not soar as they increased. Oil stocks were high in preparation for the Iran war. This surplus provided a significant cushion for the more than 1 billion barrels estimated to have been “lost” since the start of the Iran war.
Kaneva and his team hope the strait will reopen “in some form” in June. However, please be careful. Mr. Kaneba wrote that these stocks are all being used up every day. If the strait remains dangerous and difficult for many oil tankers to transport, storage will continue to decline and reach what she calls the “operational stress level” by early June. Hello, have the prices increased?
You’ve been warned!
Watch → Check out our interview with Jefferies analyst Julien Dumoulin-Smith about what the rest of Wall Street is getting wrong about Fluence Energy.
inside line
This week’s Inside Line is Francisco León, CEO of California Resources, a California-based oil and gas drilling company that continues to grow with carbon capture.
random but interesting
Energy production across the United States continues to increase. Natural gas and crude oil are leading the way, with nuclear, solar and wind also booming. Coal continues a downward trend that began nearly 20 years ago.
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Key stories for energy investors
