The AI Bottleneck Nobody Is Talking About (4 Stocks to Buy)

Bottlenecks in AI have been the story of 2026 with the biggest bottleneck going forward is probably going to be not just energy but electricity. So we have four stocks for you today to play that AI bottleneck in the future. These are not necessarily the most exciting companies but they might be extremely profitable for investors long term. John, I'm going you start off what's first on your list for investors looking at this AI bottleneck. >> First up I want to talk about Vistra. That is ticker symbol VST. There are so many investors who are excited about pre-revenue nuclear companies out there. And to that I say, why not actually look at an actual nuclear company? Now, of course, Vistra doesn't only do nuclear power. It generates power from a variety of sources, uh, including solar, it, coal, gas. I mean, it pretty much runs the gambit. It does sell electricity to customers directly in some places. However, it also supplies major grid operators such as aircott and Texas. And so it supplies actually a lot of customers from Texas and then on up north I I believe all the way up to uh Ohio. But this is a company. The reason I wanted to highlight it today was because the US government is reportedly going to lend this company about $4 billion. Now why is it doing that? because it has existing nuclear facilities and rather than needing to build new facilities, it can actually increase the amount of electricity that existing facilities are able to produce. That's called upgrading. So, it can actually upgrade existing facilities and use the grid infrastructure that it already has in place. That is a much more efficient use or a much more efficient deployment of energy in my view. You look at the nuclear plants that potentially going to be upgraded here from this government loan. One of them going directly to Meta, a Meta data center is a big recipient of that. Another one would be AWS from Amazon. One of these data centers that could benefit from Vistra simply upgrading the nuclear plants that it already has. >> Yeah, this has been one of the really interesting trends. And and just to be clear, Vistra, the the piece that I think we're talking about here is what's called the IP, the in independent power producer. The way that a lot of these utilities work is there's a regulated side of the business and there's an unregulated side of the business. So the regulated side in most states is going to be you pay your electricity bill. That rate is negotiated uh and it's kind of capped because they have a regulated monopoly. The independent power producer side is the unregulated side and that's where they build a power plant and if there's a customer who's willing to buy it maybe on a long-term contract, great, you can make a margin on that, but they take more risk because if there's not a customer, if you're just selling into the wholesale market, sometimes you're going to be really profitable, sometimes you're not going to be as profitable. So there's there's more risk in the market. But right now, I think the tailwind behind artificial intelligence and the demand is going to be what's really driving companies like Vistra. And I think you're right to having those assets in the ground that are already connected. That's, by the way, that's a huge part of the problem is not just building a power plant, whether it's a gas power plant or a nuclear power plant. It's actually building the transmission to get it to the grid or to the data center that you're trying to function and operate. So, they're going to find more and more of these opportunities where, hey, here's something that if it's collecting dust right now, uh, can we bring it back online? We've seen this, you know, since the early days, 3M Island, I think that was a Microsoft project, right? They signed a long-term contract said, "Hey, can we get this back up and running?" Uh, because they're that desperate for power. So, it's going to be a long-term potentially, you know, multi-deade tail for companies like Fistra. >> Indeed. And to your point, I mean, again, we're talking about stuff that is already where it needs to be. We just need more power. And so, it makes a lot of sense that it's going to benefit from that. >> All right, let's talk about a company that has stuff that is not quite yet where it needs to be. That is GE Vernova. This is going to be the turbines behind gas power plants, behind wind power. Uh, this is the spin-off from GE in their energy business. So when we say that there's a backlog, we can't build enough power, a huge part of that backlog is coming from companies like GE Ver Vernova. The interesting thing for GE is they've been in this business for a really long time. And all these companies have kind of said, yeah, we got tons of demand today, but we're not going to go out and like double our capacity and then be left holding the bag if this demand is shortlived. if it's only the next three, four, five years because we're thinking about this as a multi-deade business. So, what the way that that's going to manifest in their operations is that we're going to see revenue growth. It's going to be a little bit more like Micron where they're going to say, "Hey, you know what? We're just going to increase our prices. We're going to have a little bit better margins. We're going to make you prepay for these turbines that you need." And that's exactly what's happening in the market right now. So, you talk about a power position in the market. It's what are the components that companies need that they can't get fast enough. This is going to be a lot of the stuff coming from GE Vernova. So not necessarily a business that you know is all that sexy but it is extremely powerful in the current market and whether we have you know demand for anthropic and open AI and those companies fight as long as we're using more tokens that's what's going to drive electricity demand and that's ultimately going to funnel its way down to Virginia Vernova. >> Yeah. And you know, my third stock here or the second stock that I'm bringing, but the third stock for this video that I'm bringing to the table, very similar thesis here with Solaris Energy Infrastructure, uh, ticker symbol SI. This is essentially an on-site power generation kind of a thing. This is kind of the opposite thesis of a Vistra where we're we're saying we want to use the grid. This is when the grid simply can't supply what we need and we need it right now. GE Vernova is a beneficiary there. But Solaris Energy Infrastructure also a beneficiary there. Running that behind the meter kind of building out your own power plant right where you need it for what you need it for. And this >> becoming much more common. >> It is be because we need the power now and there's problems with getting connected to the grid. And so companies like these are actually benefiting. So Laris has actually more than doubled its revenue over just the last uh few years and it's gone from being simply a natural gas powered generation to really becoming the whole operator of that behind the meter system. And so essentially, if you're a data center or whatever that needs power now and needs a lot of power and you can't get it from the grid, you can contact Solaris and it'll essentially turnkey your own mini power plant on site. >> Yeah, a lot of a lot of these companies were kind of all playing the same theme, but there's a lot of different ways to play it because there is the need for those huge generators. There's the need for small energy production. And you could look at solar, wind developers, battery, uh lots of different players here are going to benefit over the next few years. Let's end with a stock that is just just on the really simple keep it simple side of things and that is Excel Energy. So Excel Energy just a typical utility. This is the bill that I pay every month. But the reason that I think Excel Energy is in a really interesting position today is where they operate. They're operating in a lot of these Midwestern states. So, Colorado, Minnesota, North Dakota, uh where data data centers are starting to go. There's ample land, there's maybe a little bit more appetite for having, uh, you know, power plants in some of these areas. There's ample wind power, there's, you know, solar availability, there's land to build these kinds of things. So I think that is going to be just a natural tailwind long term whether you're talking about building out distribution transport uh transmission the power plants themselves whether it's going to increase you know the rate base that they're operating with in the in the regulated business all of those things not going to be huge tailwinds right this is not going to be a bloom energy uh that's going to just go up like a rocket ship I think this is one of the better buys out there price earnings multiple under 20 the yield for the stock right now if the dividend yield is about 3%. That continues to grow over the next few years. If you're like, let's say closer to retirement, you just want, you know, a consistent yield. This is the kind of company whether you're looking at the AI buildout as a small tailwind or a big tailwind, I think it's just going to be positioned extremely well. There's a lot of utilities like this. One of the reasons I like Excel is just it's just in a good position geographically. uh because I think those those middle of the the country states are going to probably have more tailwinds than you think in the AI buildout. But uh yeah, what what do you think about owning just the boring old utilities? John, >> it's fine so long as you have correct expectations. If you're hoping that this will be the next Nvidia, please keep dreaming. It's not going to be that. But if you are saying, I want low beta. I I don't want a lot of volatility in my portfolio. I want something that I know is going to be fine and that'll pay me a little check every single month. Or maybe you're transitioning from some you're at the stage of your investing life where you're saying, I'm going to take some risk off the table and but I still want to be invested in the market. I don't quite want to go the bond route. I mean, this would be something that Yeah, you should sleep very well at night. >> Yeah. Ironically, you bring up bonds. Companies like this are potentially going to be even safer than bonds because that yield can go up, right? A bond payment if you own a 20-year bond that your your yield doesn't change. Your your check from that bond stays the same every single year. The yield on some of these can go up over time if the business gets better. Even inflation can be a tailwind for these companies. All right, the four stocks that we talked about today, Vistra, GE, Bernova, Solaris, and Excel Energy. Let us know what you think about those in the comments section below. Don't forget to subscribe to the Molly Fools channel here on YouTube. Thanks for watching everybody. See you next time.