From data center operators to suppliers, Barclays has myriad entry points for investors looking to take advantage of strong electricity demand. The company pointed to recent data from the International Energy Agency, which predicts that electricity consumption from data centers, artificial intelligence and the cryptocurrency sector could double by 2026. Data centers are “engines significant” of this trend, the IEA said, as their global electricity consumption could reach more than 1,000 terawatt hours in 2026 after consuming around 460 TWh in 2022. According to the agency, this would be almost equivalent to the electricity consumption of Japan. Some of this electricity consumption is powered by generative AI, considering that large language models need to be trained and retrained on a daily basis and that generative AI chatbot queries consume a lot of energy compared to Google search queries . “The IEA’s latest electricity forecast paints an even more alarming outlook for data center consumption,” analyst Hiral Patel wrote in a note Monday. “[We] We reiterate our view that accelerated investments in backup power, energy storage and cooling will be critical.” We’ve covered how generative AI will rapidly increase global energy demand (see our CNBC Pro feature on the topic here and some of Morgan Stanley’s favorite energy suppliers and data center builders here.) Now, Barclays has some other stock opportunities to highlight amid the push to develop “green data centers” around the world, especially why hyperscaler tech companies plan to one day power their centers entirely through clean electricity Barclays said it is looking at three investment areas that are a key part of this trend: data center operators, data center suppliers and builders of data center network infrastructure. Below are some of the US-based company’s initiatives: Microsoft is a One of Barclays’ top picks given its large data center footprint and its “bold” sustainability goals. The technology giant has about 30% share of the public cloud market with more than 200 data centers globally, the company said. Similar to its hyperscaler peers, Microsoft aims to operate on entirely renewable energy sources by 2025, purchasing green energy through power purchase agreements. According to Barclays, Microsoft aims to become carbon-negative, water-positive and zero-waste by 2030. Barclays highlighted Microsoft’s growing interest in using nuclear energy to power data centers via small modular reactors, or SMRs, which analysts believe it is a “key investment area to monitor” given nuclear’s ability to significantly reduce emissions and provide greater stability than solar and wind energy. In May 2023, Microsoft announced a PPA with startup Helion to purchase electricity from its first nuclear fusion power plant in 2028. Electricity provider Constellation was the energy retailer for the project. Microsoft is also interested in power grid technologies, Barclays noted. After successfully using lithium-ion batteries in a Dublin data center, Microsoft wants to expand grid-interactive battery storage to other areas. Shares of the technology company have risen more than 57% over the past year, and analysts believe the stock could gain nearly 14% over the next year, according to FactSet. According to analysts at Barclays, exposure to data center revenues is even higher for Digital Realty Trust. The company has a large and diverse presence with more than 300 facilities worldwide. This includes nine data centers in Ireland, which is a data center hotspot in Europe that is also at greatest risk given its growing electricity consumption, Barclays said. The company noted that Digital Realty has a long-term goal of making renewable energy available to all of its customers and that approximately 126 of its properties are currently equipped with 100% renewable energy. Among its most ambitious renewable energy goals is Digital Realty’s goal of offering carbon neutrality for data centers in the European Union by 2030. Shares have risen more than 26% in the last 12% months and this ‘year have gained about 7.5% this year. enthusiasm fueled by data centers. Notably, Blackstone and Digital Realty announced in December a joint venture to spend $7 billion developing 10 data centers in Frankfurt, Paris and northern Virginia. The stock hit a 52-week high on Tuesday after Stifel Nicolaus raised his price target on the stock. Barclays also highlighted semiconductor company Advanced Micro Devices as a data storage company. AMD is working to improve the power efficiency of its processors and accelerators that power servers for artificial intelligence training and high-performance computing by 30 times between 2020 and 2025, Barclays said. They noted that AMD holds about 25% of the global server CPU market. CPUs, or central processing units, are essential hardware in computers. Tech hyperscaler Amazon, power management firm Eaton and chipmaker Advanced Micro Devices are among Barclays’ other key players in the AI-powered data center boom.