An artificial intelligence (AI) server can contain some of the most advanced chips ever built. That said, without enough electricity reaching the building, it’s pretty much just an expensive metal box.
That’s becoming a bigger problem. The International Energy Agency (IEA) expects global data centre electricity consumption to climb from about 485 terawatt-hours (TWh) in 2025 to 950 TWh by 2030. AI-focused facilities could triple their electricity use over the same period.
The bottlenecks already stretch beyond chips. The IEA specifically points to tightening supplies of gas turbines and transformers. However, two Canadian companies sell something those data centres increasingly need.
Scource: Getty Images
Keep it running
Data centres need electricity every second. Renewables will provide part of the new generation, but the IEA also expects natural gas to play a major role because it can produce power when customers need it instead of when the weather cooperates.
That makes Tourmaline Oil (TSX: TOU) worth watching. Tourmaline is Canada’s largest natural gas producer. Its operations sit primarily in Alberta’s Deep Basin and the Montney formation in northeastern British Columbia.
AI isn’t the whole natural-gas thesis. Liquefied natural gas (LNG) exports, industrial demand, heating, and electricity generation already consume enormous volumes. Data centres add another customer. Rising LNG exports and power demand could strengthen long-term North American gas pricing. Tourmaline’s scale and low-cost drilling inventory put it in a useful position if that happens.
Cash while you wait
Tourmaline generated $786 million of cash flow during the second quarter and $192 million of free cash flow. Its balance sheet also remains conservative. Net debt ended June at $1.5 billion, below management’s $1.75 billion long-term target.
Yet management isn’t simply spending every extra dollar drilling. On September 22, Tourmaline announced plans to sell $287.5 million of Topaz Energy shares and use the proceeds to repurchase its own stock. It also approved a 5% increase to its quarterly base dividend, bringing the expected payment to $0.53 beginning in the fourth quarter.
At $61.17, that’s a future annualized base dividend of $2.10 and a yield around 3.4%. The bigger attraction for investors considering Canadian energy stocks is rising gas demand combined with disciplined capital allocation. Commodity prices remain the risk. More AI data centres won’t rescue Tourmaline if North American gas supply overwhelms demand or AECO prices collapse. Fortunately, AI has another bottleneck.
Transform the power
Electricity can’t simply leave a generating plant and stroll into a server rack. Voltage needs to be changed and power safely distributed throughout the system. That’s what transformers do.
Hammond Power Solutions (TSX: HPS.A) manufactures dry-type transformers and power-quality equipment used in data centres, factories, utilities, and other electrical infrastructure.
Demand has become difficult to miss. Second-quarter sales surged 44.7% year over year to a record $324.8 million. Backlog was 96.9% higher than a year earlier, with management specifically pointing to U.S. data-centre investment, electrification, and power-infrastructure spending.
Now Hammond is adding capacity. On September 22, the company announced a new Fort Worth, Texas, manufacturing facility expected to begin production in late 2027. Once fully operational, it could initially add about $250 million of annual manufacturing capacity, with room to eventually support approximately $400 million.
Bottom line
Hammond’s problem is price. At $275.18, shares have risen more than 70% this year and trade around 53 times trailing earnings. Investors looking at Canadian growth stocks are already paying for substantial future expansion. A slowdown in data centre construction, cancelled orders, tariffs, higher material costs, or problems ramping the Texas factory could hit that valuation quickly.
I’d consider Tourmaline the cheaper AI-adjacent play and Hammond the higher-growth one. Neither needs AI to become its entire business.
So while the AI boom started with processors, it can’t end there. Tourmaline can supply fuel used to generate dependable electricity. Hammond can supply the equipment needed to move that electricity where it’s required.
The chips may get the headlines. Yet the companies keeping them powered could keep sending invoices long after installation day.
