Elon Musk Says AI Needs More Power Than the Grid Can Handle. Is He Right?

Key Points Artificial intelligence is nothing more than a fancy computer program. Elon Musk is already turning to off-grid power sources, including natural gas and solar, for energy. New York and Texas have both instituted moratoriums on new data centers. These 10 stocks could mint the next wave of millionaires › When Elon Musk, the CEO of Tesla (NASDAQ: TSLA) and Space Exploration Corporation (NASDAQ: SPCX) , talks about a problem, it gets attention. Right now, he's arguing that artificial intelligence (AI) requires more power than the U.S. power grid can provide. This is both a potential threat and an opportunity if you understand the issue. Here's the quick outline of Elon Musk's concern, what he is doing about it, and what other companies are doing about it. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Image source: The White House. What is AI? AI is incredibly powerful , as news headlines frequently point out. But when you step back and look at it objectively, AI is just a fancy computer program. It can't exist without power. And the amount of power AI uses is huge. The U.S. power grid is struggling to keep up. The proof of that comes from New York and Texas. Both states have moved to slow the construction of AI data centers. A big part of that is the electrical demand from AI, though water use is also concerning. Greg Abbott, the Governor of Texas, recently noted that new connection requests, largely from AI data centers, were more than five times peak demand in the state. This is an example of why Elon Musk had to turn to off-grid power when he built Colossus I and II. Along with these giant data centers, the CEO also built his own natural gas-fueled power plant in Mississippi. Musk is also talking about using solar power, as well. Power increasingly appears to be the limiting factor in artificial intelligence. The opportunity Musk's warning highlights There's an opportunity in this warning. For example, Bloom Energy (NYSE: BE) builds hydrogen fuel cells. These are factory-built items that can be easily delivered to where they are needed to provide off-grid power. The company entered 2026 with a $6 billion fuel cell backlog, up a shocking 140% year over year. The company provides backlog figures only once a year, noting on its second-quarter call that it has large customers not yet in the backlog. Its backlog is currently growing faster than its revenue. That suggests the next backlog update in early 2027 should show more growth. Caterpillar (NYSE: CAT) is also benefiting. While most investors know the industrial giant for its earth-moving equipment, it also makes off-grid power generators. The company's backlog at the end of the second quarter grew 92% year over year, totaling $72 billion. That's not all power equipment, but that fact could actually make the stock even more attractive. Indeed, you can't build a data center without the earth-moving equipment that CAT makes. In other words, it has two ways to benefit from AI's growth. For investors looking longer term, there are companies like NuScale Power (NYSE: SMR) . This is a money-losing start-up in the nuclear power sector . It has an approved design for a small modular nuclear reactor (SMR) but is still trying to finalize its first reactor sale. The key here is that SMRs would be factory-build and could be placed next to an AI data center to provide power. AI power demand could help fuel SMR demand if the nuclear technology catches on. If you are a more conservative dividend investor, don't feel like you have to avoid the AI theme. Brookfield Renewable Partners (NYSE: BEP) offers a lofty 4.6% yield and has deals with Microsoft (NASDAQ: MSFT) and Google to help power their data center ambitions. The company's portfolio of clean energy assets is spread across the globe and includes hydroelectric, solar, wind, and storage power. In addition, Brookfield Renewable Partners owns half of Westinghouse, one of the world's largest service providers to the nuclear power industry. With such diversification in its mix, Brookfield Renewable is a one-stop shop for clean energy. There's an AI power opportunity, but mind the risk The one problem with attempting to play AI's power demand is that Wall Street has already bid up the price of many stocks that could benefit. So you need to consider valuation along with the opportunity. That said, Musk's attempt to highlight the power issue suggests that this opportunity may be larger and longer-term than many investors believe. Don’t miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this. On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $568,693 !* Apple: if you invested $1,000 when we doubled down in 2008, you’d have $59,543 !* Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $397,405 !* Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor , and there may not be another chance like this anytime soon. See the 3 stocks » *Stock Advisor returns as of August 7, 2026. Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool has positions in and recommends Bloom Energy, Caterpillar, Microsoft, and Tesla. The Motley Fool recommends Brookfield Renewable Partners and NuScale Power. The Motley Fool has a disclosure policy .