Are Water Stocks the Next AI Play? JPMorgan Predicts Data Centers Will Consume 450 Million Gallons of Water Daily

Wall Street banks are in a frenzy over "The Next AI Trade," piling into the 'Powering up America' investment themes. These include power grid companies, commodities such as copper and uranium, as well as artificial intelligence chipmakers. However, the issue of water consumption has been relatively overlooked.

JP Morgan recently released a research report titled "Deep Dive into Power, Cooling, Electric Grid and ESG implications," in which analyst William Yang and his team stated that AI data centers are widely noticed for their substantial electricity use, but the water intensive nature of their operations has been comparatively overlooked.

Citing data from Bluefield Research, Yang said total water consumption by global data centers has grown 6% annually from 2017 to 2022. He said by 2030, water consumption could jump to 450 million gallons per day. To put this in perspective, that's 681 Olympic-sized pools of fresh water that will be needed each day to cool global data centers in about 4.5 years.

“By 2027, the global AI demand may be accountable for 4.2–6.6 billion cubic meters of water withdrawal, more than the total annual water withdrawal of half of the United Kingdom,” Yang pointed out.

Note: Ranked by market cap.

Source: moomoo

The research report further points out the immense water demand from data centers in areas where water resources are scarce could spark "increased competition can strain water availability, even causing data center closures."

Source: ZeroHedge, JP Morgan