To The Moon

In the electrifying saga of the AI revolution, one subplot is stealing the spotlight: the skyrocketing demand for electricity. As tech giants pour billions into data centers to fuel generative AI models, the global grid is straining under the load. Projections paint a picture of exponential growth—data centers alone could gobble up more than double their current electricity by 2030, reaching around 945 terawatt-hours worldwide, equivalent to Japan's entire annual consumption. In the U.S., these facilities already account for 4% of national power use, a figure expected to surge sixfold by decade's end according to the Department of Energy. By 2040, AI and data centers might claim 16% of global electricity, rivaling the energy footprint of entire industries.

This power hunger should, in theory, be a boon for traditional energy producers. Oil giants like Chevron (CVX) and ExxonMobil (XOM), with their vast reserves and refining muscle, stand to supply the natural gas and even crude-derived fuels needed to bridge the gap until renewables scale up. After all, fossil fuels remain the backbone of baseload power in many regions. Yet, as of November 2025, these blue-chip behemoths are lagging the broader market. Chevron's shares hover around $155–$160, while Exxon's trade near $110–$114—modest gains at best from earlier in the year, but nothing like the S&P 500's double-digit rally. What's holding them back, and could this disconnect signal a rare value play for patient investors?

The Promise: AI as an Energy Catalyst for OilThe logic is straightforward. Training a single large AI model can consume as much electricity as 100 U.S. households in a year, and inference—the daily running of these systems—multiplies that drain exponentially. Google alone plans to drop $75 billion on AI infrastructure in 2025, much of it in power-hungry servers. McKinsey forecasts a tripling of data center demand to 460 terawatt-hours by 2030, while the IMF warns of policy mismatches that could exacerbate shortages.For oil majors, this translates to opportunity in natural gas (a cleaner bridge fuel for peaker plants) and even refined products for backup generation. Exxon, with its Permian Basin dominance, and Chevron, leveraging Guyana's offshore bounty, are ramping production despite softer prices—Exxon hit $7.1 billion in Q2 earnings on upstream strength. Some smaller drillers are already pivoting, touting AI-driven fracking to meet the surge, sparking a mini-boom in their shares. In a world where U.S. electricity production may need a 25% boost just for AI, why aren't the incumbents soaring?

The Reality Check: Oversupply, EVs, and a Renewables TiltThe answer lies in a perfect storm of headwinds battering oil prices and investor sentiment. Brent crude has dipped into the $70s in 2025, down from 2024 highs, thanks to a forecasted oil glut—the International Energy Agency now predicts record oversupply in 2026, with production outpacing demand by millions of barrels daily. Global economic growth has been tepid, curbing fuel consumption, while the EV revolution nibbles at gasoline demand—China's battery boom alone is a drag.More critically, Big Oil is on the periphery of the AI power play. Data centers are snapping up renewables and nuclear deals first—think Microsoft's reactor restarts or Amazon's solar farms—leaving oil-derived fuels as a last resort. Utilities, not upstream producers, are reaping the direct rewards: their stocks have outperformed tech in 2025, up 15–20% on steady, regulated demand. Exxon and Chevron reported Q3 profit dips amid these dynamics, with shares slipping post-earnings—Exxon down 1.5%, Chevron up a slim 2.7%. Geopolitical jitters, from Middle East tensions to OPEC+ cuts that aren't biting hard enough, add volatility without upside conviction.The result? Energy stocks have underperformed the S&P by double digits this year, with Exxon edging Chevron on efficiency but neither inspiring fireworks. Investors, burned by 2022's boom-bust, are wary of betting on "energy transition" narratives that prioritize green over black gold.

Crunching the Numbers: Dividends and DiscountsYet, amid the gloom, valuations whisper opportunity. Chevron's trailing P/E sits at 19.7–21.7, forward at 16.2—above the oil & gas industry average of 13.5 but reasonable for its integrated model and low debt (0.22 debt-to-equity). Exxon's at 16.5, trading cheaper on most metrics with superior upstream scale.The real hook? Yields. Chevron's 4.4% dividend edges Exxon's 3.6%, both backed by decades of hikes—Chevron's 37-year streak, Exxon's 42. At current prices, that's compelling income in a rate-cut era, especially if AI shortages force a fossil fuel pivot. Exxon looks like the efficiency play, Chevron the yield champ.

The Verdict: A Cautious Value Bet with AI UpsideChevron and Exxon aren't rallying because the AI electricity boom hasn't yet cracked oil's supply-demand imbalance—oversupply reigns, and renewables steal the green spotlight. But as grid strains intensify—potentially hiking bills and reliability risks—this could flip. With solid balance sheets, juicy yields, and P/Es that aren't screaming overvalued, they scream "value play" for dividend hunters eyeing a 2026 rebound. Exxon edges for growth potential; Chevron for income stability.In a portfolio tilted toward AI hype, dipping into these energy anchors could hedge against blackouts—literal and figurative. Just don't expect fireworks tomorrow; this is a slow-burn revolution, and oil's still got embers. Investors: Size positions modestly, and watch crude like a hawk. The power surge is coming—will Big Oil plug in?