NextDc Ltd (ASX: NXT) shares have gotten plenty of attention this week.
The S&P/ASX 200 Index (ASX: XJO) tech stock entered a trading halt yesterday, after closing on Wednesday at $16.71 a share. Shares are expected to resume trading on Monday.
The trading halt preceded NextDC's announcement of a massive $1.32 billion capital raising.
The funds will be raised via a 1 for 6 entitlement share offer. New shares will be issued for $15.40 apiece. Or almost 8% below where NextDC shares closed on Wednesday.
The $1.32 billion will help NextDC expand its operations to meet the record demand it's experiencing for its data centre services.
CEO Craig Scroggie said, "NextDC continues to see significant growth in demand for its data centre services underpinned by powerful structural tailwinds."
Scroggie said that amid this strong demand growth, "We have decided to bring forward the development and fitout of key assets in Sydney and Melbourne to ensure we are able to meet this growth in demand."
Which brings us to nuclear power.
NextDC shares need power
The rapid rise of artificial intelligence (AI) looks set to match or even dwarf the impact of the internet in the 1990s and 2000s.
But AI doesn't live in a real cloud. Instead, it requires an ever growing amount of computing power, which is increasingly housed in massive data centres.
And in a world intent on weening itself off of fossil fuels while still struggling to provide reliable baseload power with renewables, that poses a potential growth obstacle for NextDC shares.
Which has Scroggie casting his eye on nuclear energy.
"We need power, we need transmission networks, we need green energy, we need more solar, we need more wind and, frankly, we need nuclear," he said (quoted by The Australian Financial Review).
Scroggie added:
We have to find net zero power options that are capable of supporting energy needs when the sun is not shining and the wind is not blowing and batteries [are] not going to cut it.
And the new generation of data centres required to support our AI co-pilots (or soon-to-be pilots) requires a lot more juice.
According to Scroggie, the new data centres NextDC is planning to support AI will use 10 times as much energy as current facilities.
"We're going from general purpose computing to high-performance computing. That will see a generational change both in the scale and the density of computers," he said.
Indeed, having the right ESG credentials on its data centres could offer NextDC shares a significant boost.
As JP Morgan analyst Bob Chen pointed out (quoted by The AFR):
One thing that is also important here is the customers of these data centres, typically your global cloud service providers like Microsoft, Amazon, Google, also have an ESG mandate and are increasingly preferring operators that can source green energy.
