New research forecasts massive AI data center investments in the next five years, with the problem of how to power the facilities playing right into the hands of an important Club portfolio stock. JPMorgan estimated the buildout of global data centers, AI infrastructure, and related power supplies could cost more than $5 trillion between 2026 and 2030. “The scale of demand for compute remains astronomical,” the analysts wrote in a Monday note to clients. They said that data center infrastructure installation during the period will grow at a “rapidly accelerating rate” as well. Scaling to such heights won’t come easily. Data center growth is being constrained by several factors, according to JPMorgan, including “real estate, energy and power, water, commodity prices, and capital.” The analysts said that “power is the most important of those constraints,” because new nuclear plants historically take years upon years to build, and lead times for natural gas turbines are now three to four years. That’s why Club name GE Vernova , a leading maker of turbines, is in such a sweet spot . Data centers often need more electricity than what the nation’s power grid can deliver. These turbines, which run on natural gas outside the grid, can be hooked up to these facilities to fill in the power gaps. With the biggest names in technology increasing their spending on AI, that means more data centers and likely more business for GE Vernova. Alongside their most recent earnings, Meta Platforms , and the world’s three biggest cloud companies — Amazon , Microsoft , and Alphabet ‘s Google — all hiked their capital expenditure outlooks. GEV YTD mountain GE Vernova (GEV) year-to-date performance The AI spending tailwind for GE Vernova can be seen in the company’s stellar quarterly results, which featured earnings-per-share and revenue beats and backlog growth of 15% year over year to more than $135 billion. GE Vernova’s power segment, its largest division, saw huge revenue growth fueled by demand for heavy-duty gas turbine equipment. Orders for the segment shot up 50% organically to $7.8 billion. “What’s happening is we’re still continuing to see good positive growth on heavy-duty gas turbines,” CFO Ken Parks said during the post-earnings conference call. After the Oct. 22 earnings print, however, GE Vernova stock got caught in the weakness in the more speculative parts of the energy trade. At the time, we reiterated our buy-equivalent 1 rating and $700 price target, with Jim Cramer calling the dip a buying opportunity. A few weeks later, we made a small purchase of GE Vernova shares last Thursday after the stock continued its decline with other AI-related names. Since then, the stock turned in back-to-back gains — bringing its year-to-date advance to nearly 78%, handily outperforming the S & P 500’s 15% increase. GE Vernova must now figure out how to keep up with demand, which the analysts at JPMorgan described as a “remarkable challenge.” These turbines are complex machinery, and they take a long time to build. That means management has to make decisions on expanding production far in advance of delivery. The company has been reticent to boost manufacturing capacity too quickly because it does not want to be stuck with excess inventory. (Jim Cramer’s Charitable Trust is long GEV, AMZN, META, MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
