Energy sector: Data center boom investment

What happened: Chevron (CVX) and Microsoft (MSFT) signed a 20-year power purchase agreement on June 22, 2022, to build a natural gas-fired power plant in West Texas dedicated to supplying electricity to a Microsoft data center campus. This project, named Project Kilby, is set to consume nearly 2.7 gigawatts of electricity, equivalent to about 2 million homes. Meanwhile, data center developers are turning to on-site fuel cells for reliable power, with Rystad Energy projecting a tenfold increase in fuel cell market revenues by 2030, driven by AI computing demands.

Market impact: The energy sector, particularly oil and gas giants like Chevron and ExxonMobil (XOM), is benefiting from the data center boom. These companies see an opportunity in supplying power to data centers, which require enormous amounts of electricity. The data center boom is also driving demand for fuel cell technology, with companies like Bloom Energy (BL) and Greenidge Generation (GREE) poised to gain. Utilities and energy producers are scrambling to meet this new demand, leading to increased investment in Texas's energy infrastructure.

What to watch next: Chevron's earnings call on August 5, 2022, will provide more details on the Project Kilby progress and potential future data center power projects. Microsoft's earnings call on October 25, 2022, will offer insights into the tech giant's data center expansion plans. Additionally, keep an eye on Bloom Energy's earnings on August 4, 2022, for updates on its fuel cell server demand and potential growth in the data center market.