Venture Global Wants to Be an "AI Utility." Its 10-Gigawatt Plan Still Needs Customers.

Hyperscalers are spending staggering amounts on capital expenditures. In their rush to build data centers across the U.S., technology companies face a massive bottleneck that could limit the compute capacity they can bring online: electricity.

The demand for power is creating opportunities across the energy and industrial sectors for companies that can meet these needs and supply the fuel to run them. Venture Global (NYSE: VG), a top-tier exporter of liquefied natural gas (LNG), is getting in on the action as the company looks to transform into a vertically integrated "AI utility."

The company has laid out a plan to bring on 10 gigawatts (GW) of data center compute capacity over roughly the next decade through modular "power islands" and has framework agreements with equipment suppliers, but it has yet to sign a firm agreement with a major hyperscaler.

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How Venture Global leverages its expertise to build "power islands" for hyperscalers

Venture Global exports U.S. shale gas globally and has taken a unique approach to its business. Traditionally, LNG exporters would build massive liquefaction trains to cool methane gas into LNG.

Building these liquefaction trains is a massive, capital-intensive undertaking, and Venture Global took a different approach with smaller, modular trains that can be prefabricated and shipped on-site. In addition, the Gulf Coast regional grid couldn't supply the electricity needed to freeze and liquefy methane, so Venture has or will soon have 4.5 GW of its own gas-fired power generation capacity.

This laid the foundation for Venture's "AI utility" pivot. Management realized data centers face similar requirements: multi-gigawatts of reliable baseload power and a power grid that cannot meet this capacity demand. By leveraging this expertise, Venture aims to bring on 10 GW of compute capacity through 16 combined-cycle "power islands" by 2034.

What makes this endeavor appealing for Venture is that it also controls the natural gas pipeline interconnects and related logistics, and can provide the power islands along with the natural gas fuel they require. The shale boom has also created a glut of natural gas, which Venture can turn around and sell to its data center customers at better margins -- if energy demand remains strong.

What's next for Venture Global?

Venture Global has secured framework agreements with GE Vernova for gas turbines and power equipment, and Baker Hughes for systems and controls, spanning 2028 to 2034. The company looks to convert its first reservation into a binding order by the end of this year, with power projected to first come online in 2028 to 2029.

Venture Global's pivot to an AI utility builds on its history of constructing massive power-generation facilities in its LNG business. Next, Venture Global needs to turn this into firm customer commitments from major hyperscalers, which could rewrite the investment thesis for the company. This gives Venture Global strong upside potential, but risks are also high as it invests heavily in building out these power islands.

Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.