At the end of AI, it's all about electricity! Microsoft Corporation (MSFT.US) is making a bold bet of 7 billion dollars to sound the horn of the "self-powered era".

US technology giant Microsoft Corporation (MSFT.US) is in exclusive negotiations with US oil and gas giant Chevron Corporation (CVX.US), as well as renowned investment fund Engine No. 1, intending to reach a long-term agreement to provide strong support for a large energy complex in western Texas, which will supply power to a massive AI data center park led by Microsoft Corporation. According to reports citing insiders, the proposed large-scale natural gas power plant to be built in western Texas is expected to cost around $7 billion, with an initial power generation capacity of 2500 megawatts, making it one of the largest projects of its kind in the United States. As negotiations are still ongoing, these insiders have requested anonymity. In a joint statement released by these companies, they said, "Chevron Corporation, Microsoft Corporation, and Engine No. 1 have signed an exclusive agreement regarding a proposed power generation system and power purchase arrangements. The commercial terms have not been finalized yet, and there is no final agreement at this time." Chevron Corporation and Engine No. 1 had previously disclosed some details about their planned large power plant, but had not revealed the final user. If an agreement is ultimately reached with Microsoft Corporation, it will secure a large long-term customer for the power plant, helping with the necessary financing and funding. The project could potentially start operating as early as 2030, but it still requires approval from US tax and environmental authorities, as well as agreement on commercial terms among the three companies. It has been reported that the Trump administration previously called on large tech companies in February to "have an obligation to meet their own power needs," following which the White House pushed for commitments from companies like Microsoft Corporation, Alphabet Inc. Class C, Amazon.com, Inc., and Meta, the parent company of Facebook, requiring large AI data center operators to fully bear the costs related to energy infrastructure and to increase new power supply on their own. This policy direction of the US government, "tech giants must supply their own power," is actively promoting the investment theme that "the end of AI is power." The US artificial intelligence technology industry seems to be entering a new phase of "actively securing power" and "self-supplying power." For global tech giants like Microsoft Corporation, Alphabet Inc. Class C, and Amazon.com, Inc., energy resources are becoming more and more like core competitive barriers in the AI era. On one hand, the US power grid is facing challenges such as grid queueing, transmission bottlenecks, and shortage of large unit equipment. One of the largest power grid operators in the US, PJM, has stated that the growth in data center demand is faster than new supply, and there may even be a power shortage as early as next year; on the other hand, tech companies closely associated with artificial intelligence technology have upgraded from simply signing PPAs (Power Purchase Agreements) to directly binding underlying generation assets. Microsoft Corporation has pushed for the restart of the Three Mile Island nuclear power plant through an agreement with Constellation to supply power to the large data center it leads; Meta has agreed to pay all service costs for its super large data center in Louisiana and is striving to push for the integration of over 5,000 megawatts of clean power resources in Texas, leading the construction of its largest data center globally in Richland Parish. The latest moves by these tech giants seem to indicate that whoever can quickly secure base load power sources, underlying large-scale transmission channels, and unit resources will be more qualified to expand the next round of AI computing power. The so-called "self-built power system" in reality usually does not completely disconnect from the grid or build its own isolated system, but rather tech companies invest their own money to secure power sources, bear the costs of integration and supporting infrastructure, and even construct exclusive or semi-exclusive power supply projects when necessary. A $7 billion self-supplying era ignited! Microsoft Corporation partners with Chevron Corporation in a bold bet on Texas energy giant Microsoft Corporation, as a longtime supporter of ChatGPT developer OpenAI, is persisting in expanding its data center construction despite recording its worst quarterly performance since the 2008 financial crisis. This is to continue competing with Alphabet Inc. Class C's parent company, Alphabet Inc., and Amazon.com, Inc. for dominance in the cloud computing sector and absolute leadership in cloud-based AI training/inference platforms. Securing reliable base load power is becoming a critical challenge, and the collaboration between Chevron Corporation and Engine No. 1 is expected to address this challenge through their extensive natural gas production and large turbine contract projects in western Texas. The next generation of large data centers often choose to be built in regions far from major population centers but closer to fuel sources, as their power demands are extremely high. The project location selected by Chevron Corporation and Engine No. 1 is near Pecos, close to the Texas-New Mexico border, right at the core of the largest oil and gas-producing region in the US - the Permian Basin. The natural gas produced in the Permian Basin, as a byproduct of oil production, is so abundant that it often exceeds pipeline capacity for transportation. As a result, some natural gas is burned directly as it cannot be transported to areas of demand, making the region an ideal location for building power plants. Landbridge Co. LLC, a major land resource owner in the area, has stated that at least nine large data center projects proposed by tech companies have been in development in northern and western Texas over the past two years. The key strength of Chevron Corporation in entering the AI power supply area lies in its long-term collaboration with Engine No. 1. The latter successfully launched aggressive investment actions against its rival Exxon Mobil Corporation in 2021. This collaboration has resulted in the acquisition of seven large natural gas turbine orders from GE Vernova Inc., with strong demand for such equipment often leading to waiting lists for new customers lasting several years. Chevron Corporation has stated that the large power project in Pecos is expected to be operational by 2027 and will gradually increase to a power generation capacity of 2500 megawatts within three years. According to U.S. Energy Corp. data, this is equivalent to the power generation scale of more than two typical nuclear reactors. If successful, the large power plant could potentially be expanded in the future to a maximum of 5000 megawatts. Operating under the entity name "Energy Forge One LLC," Chevron Corporation has applied for several tax exemptions with local governments in western Texas. Its air emission permit application submitted to the Texas Commission on Environmental Quality in October has been deemed administratively complete. The end of AI is power! Electric power stocks are rising with a "super bull market" shock With the Trump administration pushing US tech giants into the "self-supplying power" era, companies like Microsoft Corporation, Alphabet Inc. Class C, and Meta have recently been securing power through long-term purchase agreements, co-locating gas turbines, restarting nuclear power plants, supporting transmission, and sharing costs, turning electricity from a public utility into a dedicated production material bound to AI data center super parks. This policy shift towards "self-supplying power" objectively turns AI data centers from large electricity consumers into "electricity infrastructure investment entities," shifting the requirement from simply "grid access capacity" overflow to the full set of power equipment capital expenditures of "self-supplying power + transmission system + on-site power distribution system" associated with data centers. This means that the unprecedented demand from the AI sector, often referred to as the "electricity-consuming beast," will lead to an unprecedented "super bull market" in electric power stocks. In his State of the Union address to Congress, President Trump stated that tech companies will be required by the government to build dedicated power supply systems for their expanding AI infrastructure, rather than drawing additional power from local grids and increasing loads significantly. Chevron Corporation explicitly stated last year that its gas power plant for data center construction will initially bypass the existing transmission network to reduce the risk of raising residential electricity prices. US tech companies are indeed entering an era of seizing power and moving towards a "contracted self-supplying power" era. Alphabet Inc. Class C, Microsoft Corporation, and the parent company of Facebook, Meta, are leading the global new construction and expansion of AI data centers, which is clearly closely tied to the need for power supply. This is why the investment theme that "the end of AI is power" is becoming more and more popular. Moreover, if the "self-supplying power" path is ultimately institutionalized across the US and other regions such as Europe, it will undoubtedly shift a significant portion of AI capital expenditures systemically to power equipment and grid technology. The global capital markets have recently pushed power equipment and grid chains as the "new main storyline" for a clear reason: the AI arms race has shifted demand from GPU/TPU/AI server computing power to generation equipment (gas turbines), transformers/switchgears, transmission and distribution expansion, grid integration engineering, and dispatch software. Deconstructing electricity system engineering, "self-supplying power" does not mean "off-grid operation," but more commonly involves Behind-the-meter power sources (large gas turbines/gas engines, renewable + storage, and even nuclear power PPAs) + redundant dual-line connection with utility grids. For example, European industrial giant Siemens Energy is directly benefiting from the demand for gas turbines and grid equipment driven by AI, with performance and stock price closely tied to the "AI data center construction boom" driven by the North American AI construction process. Europe's largest grid operator E.ON is also investing towards "preparing for the large-scale expansion of AI data centers in Europe," and the European stock market's utilities sector have become one of the beneficiaries of the AI-related market.