EXCLUSIVE: AI Data Center Demand Sparks Energy Investment Rush, Raises Valuation Concerns
Investors are increasingly looking beyond the companies building AI chips and data centers to the businesses supplying the electricity needed to run them.
But while surging power demand is creating a major investment opportunity, industry experts warn that some energy startups are already attracting valuations that assume years of growth before they have proven they can deliver.
PitchBook’s fourth-quarter 2026 list of data center-exposed companies highlights several businesses positioned to benefit from the expansion, including nuclear startup Valar Atomics, battery developer Form Energy, advanced nuclear company Newcleo and geothermal startup XGS Energy.
Valar Atomics had a listed post-money valuation of $6 billion following an August 2026 funding round. Form Energy reached a $2.5 billion listed valuation after a later transaction that month, while Newcleo was valued at $2.43 billion following a September transaction.
Matthew Roling, executive director and assistant clinical professor at the Abrams Climate Academy, said the immediate opportunity is concentrated in companies that can help data centers secure electricity quickly.
“Data centers’ binding constraint is speed to power. So the winners are the companies that sell speed to power: gas turbines, grid equipment and batteries,” Roling said in an interview with Benzinga.
The need is becoming harder to ignore. U.S. data centers consumed an estimated 4.7% of the country’s electricity in 2024, or 192 terawatt-hours, according to a June 2026 update from Lawrence Berkeley National Laboratory. That share could approach 12% by 2030 as AI infrastructure expands.
Investors Question Whether Valuations Can Hold Up
The investment rush comes with a significant caveat: Not every startup attracting capital will become a commercial success.
“The demand is real, but the valuations assume perfect execution,” Roling said, pointing to construction costs, permitting delays and supply-chain constraints facing capital-intensive energy businesses.
Scott Zack, owner of private investment company Creek Equity, put the valuation risk more bluntly: “For pre-revenue companies valued on the size of the demand forecast, enthusiasm is running ahead of reality.”
The November midterm elections also underscored a growing political risk for companies betting on the AI power boom. Data center development and rising electricity bills became campaign issues across the country, with 34 data center-related ballot measures appearing in 30 counties across eight states, according to a report from S&P Global Market Intelligence. Proposals ranged from tighter restrictions on development to requiring companies to cover more of the infrastructure costs associated with their facilities.
The political pressure could create additional uncertainty around permitting, project timelines and the economics of supplying power to data centers, adding another factor investors must consider when valuing energy startups.
Roling sees some of the strongest risk-adjusted opportunities in what he calls the “unglamorous middle” of the energy market: grid equipment, transformers, battery integration and demand management.
Those businesses may not have the same appeal as a next-generation nuclear reactor, but they could benefit sooner from the need to connect new data centers and manage electricity demand across existing power networks.
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