Morgan Stanley "AI Power Supply Summit" Key Points: Preference for "off-grid" in U.S. data centers increases, energy storage becomes standard configuration

Morgan Stanley's second AI Power Summit revealed that the construction of AI infrastructure in the United States is facing severe challenges. According to Hard AI, Morgan Stanley's second "AI Power Summit" was recently held in New York, with attendance surging fourfold to nearly 400 participants compared to last year, highlighting the market's increasing concern over the power supply issues related to AI infrastructure. The conference conveyed three core signals: First, U.S. data center developers are facing a serious risk of power shortages, with a projected supply-demand gap of 10-20% by 2027-2028; Second, driven by political and execution risks, the demand for off-grid solutions has surged, with natural gas generators and energy storage systems becoming standard; Third, the conditions for power and data center development transactions are improving, but 2026 will be the "execution year," where project execution capabilities will determine the performance of related stocks. Investment opportunities are concentrated in "fast power supply" solutions, Bitcoin-to-data center projects, and the natural gas industry chain. Morgan Stanley emphasized in its report that we should "invest in the bottleneck links of AI deployment," as these constraints will become key factors determining stock price performance in 2026. Power Shortage Crisis Looms Morgan Stanley's analyst team confirmed that U.S. data center developers will face a 10-20% power supply gap in the coming years, and feedback from the summit further reinforced the likelihood and severity of this prediction. The critical time nodes for the issue are concentrated in 2027 and 2028, with most new data center project agreements set for delivery between 2028-2030, indicating a potential supply vacuum in 2026 and 2027. A Google executive revealed the urgency of demand at the summit: Our 7th and 8th generation TPU utilization rates have reached 100%, indicating the high level of demand. While everyone hopes to use the latest generation products, they are willing to accept any available products, which shows that demand is extremely strong. What is concerning is that I believe the supply will not catch up with demand as quickly as we hope. Surge in Demand for Off-Grid Solutions, Energy Storage Becomes Standard for Data Centers As the power demand for data centers surges, the previously simple supply-demand issue has evolved into a sensitive political game. Morgan Stanley pointed out that developers are facing increasingly severe challenges in accessing the power grid and are concerned about political backlash from raising residential electricity prices. Therefore, the market logic is undergoing a fundamental shift—no longer solely relying on the grid but seeking self-sufficiency, with off-grid solutions becoming a new trend. Due to considerations of avoiding political and execution risks, the market's preference for off-grid solutions is rising. Although many issues (such as water usage, land occupation, and noise) can be addressed through clever project structures, political concerns still exist. This has prompted developers to turn to off-grid solutions, primarily focusing on gas turbines, reciprocating engines, fuel cells, and accompanying battery storage. Specifically, popular off-grid solutions mainly focus on natural gas turbines, reciprocating engines, and fuel cells, combined with battery storage systems. The conference revealed that on-site power generation products are transitioning from temporary solutions to permanent power supplies, with microgrid contract terms continuously extending, and recent negotiations reaching over 10-15 years Morgan Stanley's summit revealed an important trend: battery storage may become the new standard for "self-powered" data centers by 2026. Morgan Stanley believes that having battery storage can be seen as a new "political entry threshold," helping data center developers alleviate concerns that their projects may drive up electricity prices during peak demand. Improved trading conditions but execution risks remain, 2026 as the "Year of Execution" Morgan Stanley stated that due to the significant demand for these products exceeding supply and this mismatch widening, power and data center developers may obtain better trading conditions, such as project risk allocation. This is a favorable development, as there are significant project execution risks ranging from supply chain to labor challenges. 2026 will be the "Year of Execution," and the stock performance of rapid power solution providers will increasingly be driven by the success of developing power and data center projects. In the context of non-linear growth in AI computing power, those who can solve power supply issues the fastest will gain a high premium. The report predicts that the U.S. may face a power shortage for data centers as early as 2027 or even 2026. Therefore, the core trading logic of the market has locked onto the metric of "time to power." 2026 will be regarded as the 'Year of Execution,' and stock performance will primarily depend on the success of developing power and data center projects. Even if we can deploy sufficient data center infrastructure (which is considered extremely challenging in the U.S.), computing power demand will still exceed supply. Morgan Stanley remains optimistic about the potential for significant Bitcoin-to-data center reconfiguration trades in 2025, 2026, and beyond. Such trades offer significant time advantages and lower (but far from zero) execution risks. Natural gas may play a key role in meeting the growing power demand, further supporting the already optimistic market outlook for the coming years. Morgan Stanley advises investors to "own the bottleneck" (investment opportunities in AI deployment constraints), focusing on Bitcoin mining facility transformations (providing rapid power access), the natural gas value chain (especially companies offering "wellhead to socket" bundled solutions like EQT and WMB), and off-grid solution providers. In this arms race of AI, power is not just energy; it is a qualification for survival. Risk warning and disclaimer The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account individual users' specific investment goals, financial conditions, or needs. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this is at one's own risk