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

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AI's insatiable appetite for electricity could revive a forsaken energy source Published Sun, May 17 20266:22 PM EDTJim Cramer@jimcramer 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. So did I. B & W has a $2.7 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. 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. The dirty fuel — at least relatively if not absolutely — accounted for 50% of U.S. 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. The stock had gone out at $21.22 the day before and finished trading at $21.85. So you could call the deal wildly successful, even as it was handled by B. Riley, a brokerage house under investigation by the Securities and Exchange Commission. I am disclosing this relationship because Wolfpack Research, a short-selling firm, has cited it as a negative for Applied Digital and, by extension, for B & W. What's considered wrong here? Mainly, Wes Cummings, CEO of Applied Digital, also served as the president of B. Riley Asset Management until February 2024. Short sellers have claimed that the $2.4 billion contract with Applied-backed Base Electron was used to pump up B & W's stock. B. Riley holds a substantial stake in B & W, so the increase in backlog was meaningful. I don't think it could have done that secondary all the way up here without it. I go into all of this not to discredit B & W, because it clearly has the technology needed to build plants, but because I don't want anyone to think that B & W has huge multiple-power contracts. The company would most likely not have raised the money so easily without the Base Electron contract, and we have no real assurance that Applied Digital will go through with its plans. Like many companies in this arena, Applied Digital loses significant money. So does B & W. Applied Digital was worth $1.5 billion a year ago. It is now worth $12 billion. Late, late, late. Importantly, 32% of Applied Digital's outstanding shares are sold short. That could be the usual skepticism and bias against so many of these data center "stories." Or it might be the tenuous relationship with the tarnished B. Riley. Applied Digital has a relationship with CoreWeave , which accounts for the bulk of Applied Digital's $16 billion backlog. It has another 15-year lease with an unnamed hyperscaler. That's enough to make Applied Digital "real" and therefore validate B & W's stock price increase. Another positive for B & W: it has its own proprietary capability for building natural gas power plants. Right now, GE Vernova , which the trust owns, is the principal builder of natural gas-fired plants. But GE Vernova has made a point of telling me that it is sold out near term and can't add more plants than it has