Why the future of data centers may be in Space

The article discusses the growing power constraints behind AI data center expansion and the idea that some compute infrastructure may eventually move into space. Melius Research’s James West says power is currently the top bottleneck for hyperscalers, with AI models delayed by grid limitations. He argues the existing U.S. grid was built for gradual load growth, not today’s surge, pushing companies toward private, behind-the-meter solutions using natural gas, solar, storage, and potentially small modular reactors. He also notes regulatory uncertainty in markets like PJM and ERCOT has stalled utility stocks, despite continued strong demand for chips and AI infrastructure. The market implication is constructive for independent power producers, utility supply-chain names, and firms able to secure fast power delivery, while traditional utilities may remain under pressure until regulatory rules and interconnection issues are clarified.