SpaceX Needs Huge Amounts of Power. Here's the Energy Stock to Buy to Play It.

When Space Exploration Technologies (NASDAQ: SPCX), usually just called SpaceX, reported earnings, the big number was $16.4 billion. That's how much money the company spent on artificial intelligence (which it is now calling superintelligence, or SI). That's roughly 10x what the company spent on its space business. AI is just a fancy computer program, so it doesn't exist without electricity. And SpaceX is just one example of a technology company spending massive amounts of money to build AI infrastructure.

If you want to get in on the huge demand for electricity highlighted by SpaceX's AI capital spending spree, you should look at Brookfield Renewable (NYSE: BEP)(NYSE: BEPC). And the best part is the steadily growing distribution backing Brookfield Renewable's well-above-market 5.4% yield. Here's what you need to know.

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How big is the opportunity?

According to the International Energy Agency (IEA), electricity demand from artificial intelligence is expected to roughly double between 2024 and 2030, reaching 945 terawatt-hours. That's a roughly 15% annualized growth rate, which the IEA expects to be "four times faster than the growth of total electricity consumption from all other sectors." And that's just to 2030; AI electricity demand is expected to keep growing from there, meaning that SpaceX is just the tip of the iceberg when it comes to AI electricity demand.

Brookfield Renewable is uniquely positioned to supply that demand while also leaning into another growing power trend, clean energy. It operates a portfolio of clean energy assets across North America, South America, Europe, and Asia, enabling it to provide power worldwide. And its generating fleet includes hydroelectric, solar, wind, and battery, so it can offer many different power options. The one that isn't on that list is nuclear, but even there, Brookfield Renewable has investors covered. It owns a stake in Westinghouse, one of the world's largest nuclear power service providers.

Brookfield Renewable pays you well to own it

To be fair, Brookfield Renewable will be of greatest interest to dividend investors, given its lofty 5.4% yield. However, it is important to note that the distribution has grown at an annualized rate of 5% over the past decade, driven by a steadily growing business. Add that dividend growth to the yield, and you get around 10%, which is roughly the total return investors expect from the market over time. This is not a sleepy income investment, highlighted by the company's long-term goal of 5% to 9% annual distribution growth. The historical inflation rate is around 3%, meaning the buying power of Brookfield Renewable's distribution is growing over time.

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However, the big benefit of owning Brookfield Renewable over a direct AI play is a little more subtle. Investors are worried about an AI spending bubble, which isn't unreasonable. If, or perhaps when, that bubble pops, AI spending could collapse. But all the infrastructure previously built will still need electricity to keep operating. So Brookfield Renewable's business should be resilient to an AI downturn.

Play it safe with AI, go with Brookfield Renewable

You could invest in a more direct AI play, such as SpaceX. But the massive capital spending on AI today is reminiscent of past technology spending that eventually proved overdone. When a bubble bursts, it can be brutal on the companies caught up in it. Brookfield Renewable operates outside that bubble, has a globally and technologically diverse power business, and its customers will still need electricity even if AI capital investment spending falls. If you are looking for a simple way to play AI's power needs, high-yield Brookfield Renewable covers a lot of ground.

Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.