Tech giant Google (GOOGL) has signed new agreements with two U.S. electric utility companies to cut back power use at its AI data centers during times when the electric grid is under heavy strain. The company announced the move on Monday as demand from AI workloads continues to grow so fast that it is beginning to outpace available electricity supplies in some areas. The agreements are with Indiana Michigan Power and Tennessee Power Authority. These utility firms, like many others, have seen huge spikes in power from big tech companies’ AI data centers.
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As a result, in some regions, the demand is now higher than the supply, which is leading to fears of possible blackouts and higher bills for homes and businesses. This situation has also made it harder for the tech industry to grow AI, which requires a significant amount of power to be delivered quickly. Under the deal, Google will temporarily reduce power use at its data centers when asked by the utilities. Interestingly, this is the first time that Google has formally joined a “demand-response” program, where large power users cut consumption in exchange for payments or lower energy bills.
Google says this strategy speeds up data center connections, reduces the need for new power plants and transmission lines, and helps grid operators manage electricity more efficiently. It is also worth noting that these programs have mainly been used in industries like manufacturing and crypto mining, but applying them to AI is new, and could become more common as U.S. electricity supplies tighten.
Is Google Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on GOOGL stock based on 26 Buys and nine Holds assigned in the past three months. Furthermore, the average GOOGL price target of $214.41 per share implies 10.5% upside potential.
