New research shows AI data center infrastructure is more closely tied to clean-energy returns than to traditional energy.
Behind every AI prompt sits a heavy, physical infrastructure with a growing appetite for electricity. This could lift demand for natural gas and energy storage, renewables, grid equipment, and transmission, but each option carries different economics, physical limits, and exposure to interest rates. How, if at all, do these energy connections show up in public-market returns? The new working paper, “The AI-Energy Nexus: Data Center Demand and the Dynamics of Clean and Traditional Energy Stock Returns,” co-written by George Serafeim of the Climate and Sustainability Lab at the HBS AI Institute, tests that question by studying how energy investments moved alongside data center and AI-related assets from 2023 to 2025, how clean and traditional energy stocks respond differently, and how interest rates complicate those relationships.
Why This Matters
Most organizations will not need to make decisions about clean-energy stocks or data-center power contracts. Even so, this study offers a useful way to think about technological change: major innovations rarely remain contained within the industries that create them. AI is already generating new pressures and opportunities across industries because its growth depends on so many parts of the entire economy. For business leaders and executives, the challenge is therefore to look beyond direct applications of the technology and consider how it could reshape the customers, suppliers, and constraints surrounding their own businesses.
Link to the HBS AI Institute Insight Article
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