Dear readers,
On Friday we wrote that Dell’s 88 percent revenue surge proved the AI profits are accumulating in physical hardware — in metal, not code. We noted that Dell’s $51 billion backlog depended on power grids, building permits, and local politics that no earnings call can control. That observation now looks less like a caveat and more like an investment thesis of its own.
The constraint we flagged is becoming the story. BlackRock CEO Larry Fink has put a number on it: between $7 trillion and $10 trillion in AI infrastructure spending through 2030, increasingly funded by pension and savings capital. The five major hyperscalers — Google, Meta, Amazon, Oracle, and Microsoft — will collectively spend more than $1 trillion in capital expenditures this year, with cumulative outlays projected to reach $8 trillion by 2031. Those dollars need to land somewhere physical. And the companies that own the wires, the cooling systems, and the grid connections are repricing accordingly.
The Power Crisis Has a Timeline
The numbers are specific enough to worry about. Those same five hyperscalers already accounted for 49 percent of all global corporate clean-energy power purchase agreements in 2025 — deals like Microsoft’s agreement with Constellation Energy to restart capacity at Three Mile Island, or Google’s geothermal contract in Nevada.
But procurement contracts do not generate electrons on their own. PJM Interconnection, the grid operator serving 13 eastern states and 65 million people, has warned of potential power shortfalls beginning in the summer of 2026. Within PJM’s territory, data centers drove 63 percent of the most recent spike in capacity auction prices, adding roughly $9 billion per year in costs. That is not a projection. That is a bill that ratepayers and utilities are already negotiating over.
Utilities Are Becoming AI Plays
This demand shock is rewriting the identity of an entire sector. NextEra Energy is pursuing a $66.8 billion merger with Dominion Energy to expand into Virginia and the Carolinas — the densest corridor of U.S. data center construction. Institutional money has noticed: Vanguard, Norges Bank, and Pictet have all increased their NextEra positions materially. Analyst consensus targets $99.20 per share. Entergy is drawing similar institutional interest, with a consensus target of $118.84.
These are companies that still pay quarterly dividends — NextEra distributes $0.6232 per share every three months — but whose growth profiles now track AI capital expenditure cycles rather than weather patterns or rate cases. For portfolio construction purposes, they have migrated from the defensive column to something closer to infrastructure-levered growth.
NIMBYism Is Tightening Supply
Friday’s newsletter mentioned more than 140 citizen groups opposing data center construction across the United States. That number has crystallized further: 142 opposition groups are now active in 24 states, and 25 projects were canceled in 2025 alone due to local resistance. The complaints are tangible — noise from cooling systems, water consumption, and electricity bills that spike when a 100-megawatt facility plugs into a grid designed for suburban homes.
The dynamic is not uniquely American. Germany’s data center market grew 9 percent in 2025 to 2,980 megawatts of capacity, with Frankfurt commanding 1,100 megawatts. AI-specific workloads are expected to consume 40 percent of German data center energy by 2030, up from 15 percent today. Regional utilities Avacon and EnviaM recently commissioned a €40 million facility near Hannover, signaling that European operators see the same opportunity their U.S. counterparts are chasing.
Every canceled project and every delayed permit makes existing capacity more valuable. The opposition movement is, paradoxically, the best friend of incumbents who already have grid connections and operating licenses.
The Component Makers Cashing In
Beyond utilities, the physical supply chain is producing its own winners. South Korea’s Gaon Cable, through its U.S. subsidiary, secured a five-year contract with Meta to supply busduct power distribution systems for dozens of AI data centers. The deal starts at $34 million but could reach a cumulative $2.7 billion. In Pennsylvania, Advanced Cooling Technologies is scaling production to deliver more than 500,000 liquid-cooling components annually for high-performance computing installations.
These are the kinds of businesses that rarely make front pages but capture durable margin in an infrastructure buildout. When demand is constrained by physics, the companies that solve physical problems tend to get paid.
Market Snapshot: Nine Weeks and Counting
The S&P 500 closed the week with its ninth consecutive weekly gain, powered in large part by Dell’s blowout that we covered Friday. The macro backdrop cooperated: the April core PCE reading came in at 0.2 percent month-over-month, softer than expected, giving the Fed marginally more room to maneuver. A preliminary U.S.-Iran agreement on reopening the Strait of Hormuz pushed oil below $90 per barrel.
Crypto remained under pressure. An Iranian missile strike on a U.S. base in Kuwait, combined with persistent ETF outflows, briefly drove Bitcoin below $73,000. The sustained institutional exit from spot Bitcoin ETFs — now stretching over multiple sessions — suggests positioning adjustments that go beyond short-term volatility.
What This Means
Next week brings the Computex trade show in Taiwan, where Nvidia and Microsoft are expected to unveil AI-enabled Windows PCs. Charles Schwab chief strategist Liz Ann Sonders has cautioned against what she calls “casino-like behavior” in markets running this hot, recommending profit-taking in momentum names.
The rebalancing she implies has a logical destination. Friday’s Dell story showed where AI capital expenditure lands as revenue. The next link in that chain is where that revenue gets spent — on power contracts, grid upgrades, cooling infrastructure, and the permits to build it all. The companies that control those assets are not glamorous. They are essential. And essential, in a supply-constrained market, tends to get repriced.
I hope you enjoy the rest of your weekend.
Best regards,
The StocksToday.com Editorial
