They want power, and lots of it

Natural gas, nuclear power critical for AI buildout

Artificial intelligence (AI) has been the dominant theme in equity markets throughout 2026. Investors have largely focused on the hyper-scalers and their enormous investments in AI infrastructure. Yet large-cap technology is only part of the story as AI is reshaping industries across sectors.

There are many questions being asked about artificial intelligence right now. How will companies monetize it? How many jobs will it replace? However, one receiving far less attention is whether the energy system can keep pace with the rapid and widespread construction of AI data centres.

BloombergNEF projects data centre power consumption will hit roughly 106 gigawatts by 2035, which is more than double the level used today. The speed of the ongoing infrastructure buildout and subsequent implementation could push this figure even higher. This will necessitate the use of all energy types across North America, with natural gas and nuclear power likely to be two of the most relied upon sources.

Natural gas already has several things working in its favour, including its scale, reliability, existing infrastructure, and cleanliness compared to coal. It accounts for roughly 43% of power generation in the United States today, which equates to 35 billion to 40 billion cubic feet per day. That is expected to reach 60 billion cubic feet per day by 2035.

Nuclear power, meanwhile, is an ideal long-term option because of how it can be scaled and its alignment with the current decarbonization goals of Western governments. Nuclear currently supplies roughly 20% of U.S. electricity demand, and this market share is expected to remain stable until 2035. This would imply an increase from 800 million megawatt-hours to the 1-to-1.2 billion range in that timeframe.

Investment implications

So, with all that in mind, what opportunities might this present for investors?

Advantaged producers could benefit from higher demand and strong natural gas pricing, while midstream companies are positioned to support the transportation and infrastructure required to bring additional supply to market. On the nuclear power side, advantaged uranium producers are positioned to benefit from elevated demand along with the companies involved in reactor design and construction. The producers with the strongest amounts of reserve life and competitive cost positioning relative to their peers could be especially primed to succeed in the coming years.

Time is a legitimate bottleneck to be aware of, however, especially as it pertains to nuclear power. It can take years to develop a uranium mine and just as long to construct a nuclear reactor. The current U.S. administration has made competitive positioning within this space a priority with this consideration, committing roughly US$20 billion to reactor development as well as announcing sector-specific production and investment tax credits.

Energy, like AI more broadly, is therefore both a short- and long-term investment theme. We believe natural gas and nuclear power will both play critical roles in the AI buildout, with the former likely being relied upon more in the short-to-intermediate future, and the latter potentially becoming an increasingly important contributor in the decades ahead.

Pulkit Sabharwal, MBA is an Equity Analyst at AGF Management Ltd., focusing on the Energy sector

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