A century-old land owner has seen its stock soar almost 200% this year amid a scramble for AI data centers
- Texas Pacific Land Corp.'s stock has skyrocketed 198% this year as investors bet its land will be key for data center buildouts.
- The company owns 873,000 acres of land in the Permian Basin, an oil and gas hotspot in West Texas.
- Data centers require huge amounts of power, and tech giants are poised to spend billions amid the AI boom.
Texas Pacific Land Corp. has been around for over a century, but its stock is just hitting a major stride now as investors bet it will reap the gains of the artificial intelligence boom.
The landowner's stock has surged 198% so far this year to trade at $1,593.52 per share as of midday Monday, boasting a market cap of almost $37 billion. The stock gained 14% on Friday on news that it would replace Marathon Oil Corp. in the S&P 500.
The company, based in Dallas, owns 873,000 acres of land in the Permian Basin, an oil and gas hot spot in West Texas.
The huge swath of land is already home to bitcoin mines, renewable power assets, and large batteries. In such an oil-rich area where natural gas is cheap, investors are now betting that there's also a big opportunity for the company to benefit from the huge demand for power and space from tech giants scrambling to set up the data centers powering their artificial intelligence ambitions.
Data centers require a massive amount of space and power to operate, and their electricity demand is primed to exceed supply in just two years, a recent estimate from Bernstein Research says.
For tech giants looking to build data centers, Texas Pacific Land's sprawling acreage adjacent to a source of cheap and abundant energy would be prime real estate.
"We feel that we're positioned as well as anyone in West Texas to provide land and water solutions as those opportunities unfold," CEO Tyler Glover said this month in a call with investors, referring to opportunities to lease land for data centers.
"TPL just has a lot of positive attributes for data centers," Glover said. "Nobody has more land than us in West Texas."
Companies like Alphabet, Microsoft, Amazon, and Meta are expected to spend over $200 billion on AI infrastructure next year, Bloomberg data shows.
The company was founded in 1888 to repay bondholders of a failed railroad venture and has become a major corporation since. The land's value shot up amid a shale frenzy at the start of the 21st century.
The company earns money from oil and gas royalties from producers like Exxon Mobil and Chevron, leasing land to drillers, handling wastewater disposal, and selling water to frackers. It's recently expanded to accommodate bitcoin mines and renewable power projects, too.
The land in the basin is so abundant with oil that it produces huge amounts of natural gas that often completely fills pipelines. Gas prices in the area turned negative at several points this year.