AI's insatiable appetite for electricity could revive a forsaken energy source

An important development from the financial markets: Coal could come back. That was my insight, or more, my instinct, after interviewing Kenny Young, the CEO and seven-year veteran of Babcock & Wilcox , the 160-year-old boiler manufacturer turned engineering and construction company. Young wanted to talk about the surging demand for power spurred by the data center boom.

7 billion backlog, $2. 4 billion of which is a deal with Base Electron, backed by Applied Digital , a company purpose-built to design digital infrastructure for high-performance computing. I want to write about this "Mad Money" encounter for a few reasons.

Economic Details

First, to show you that the data center story is so much bigger than we imagine. Our thinking is constrained by a particular negative bias that says it all has to end, like the dot-com crash of the early aughts. That bias has kept people from making easy money, like the money you would have made by buying Babcock & Wilcox stock, which is up 244% this year alone.

This $21 stock traded below $1 one year ago. Second, I am no groundbreaker here: obviously, I'm late to the party. But that has somehow meant nothing to so many of these companies — witness Micron , Intel , Sandisk — that I must acknowledge my timing.

Some of you might consider it late, late, late, as I wrote about last week . Others argue, 'So what, it's the data center. '" Third, I want to point out that the power demands are so great that the once-forsaken energy source of coal is going to come back in a big way if the utilities don't stop President Donald Trump and the Department of Energy from forcing coal-based or coal-using companies to continue using it.

Analyst Views

The dirty fuel — at least relatively if not absolutely — accounted for 50% of U. power in 2007 and is now down to 15-17% of the grid's energy source. Even though it is down 40% from 2010, it still powers 173-190 gigawatts (GW).

We may need 90-100 GWs of new energy if the data center buildout continues at this pace, so the idea of reviving coal, or at least not letting coal plants close, is hardly fanciful. I write that because while the environmental toll of coal has been obvious for generations, the president regards coal as a major resource and domestic national security weapon. Which brings me back to Babcock & Wilcox.

Last Friday, B & W placed an offering of 10. 8 million shares at $18. 50, mostly to shore up its balance sheet and prepare for a major expansion.

Financial markets are tracking the development closely as investors assess the likely impact.