Overview
Alphabet just paid $4.75 billion to buy Intersect Power, a company that builds data centers and generates the electricity to run them. Microsoft signed a 20-year deal to restart a mothballed nuclear reactor at Three Mile Island. Amazon is backing small modular reactor startups with $500 million and building its own nuclear-powered facilities. In 15 months, Big Tech has committed over $100 billion to control not just data centers, but the power plants that feed them.
The reason is brutal math. AI training burns 10 times more electricity per server rack than normal cloud computing. U.S. data centers already consume 4% of the nation's power—a figure projected to hit 10% by 2030. But utilities can't expand fast enough. Grid connection wait times have hit seven years in some regions. So tech companies are doing what Standard Oil did in 1900 and Ford did in 1920: buying the entire supply chain. If you can't get power from the grid, own the grid.
Key Indicators
People Involved
Organizations Involved
Develops co-located data centers and renewable energy generation, bypassing traditional grid connections.
Operating company restarting mothballed nuclear reactor exclusively for Microsoft data centers.
Developing liquid-salt-cooled reactors operating at near-atmospheric pressure, reducing costs.
Joint venture building integrated AI infrastructure at utility scale.
SMR company backed by Amazon to deploy distributed nuclear generation.
Timeline
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Alphabet Acquires Intersect Power for $4.75B
AcquisitionAlphabet announces definitive agreement to acquire Intersect Power for $4.75 billion cash plus debt. Deal includes gigawatts of data center and energy projects in development. Expected close H1 2026.
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Stargate Expands to 7 Gigawatts, Five New Sites
ExpansionOpenAI and partners announce five additional Stargate sites bringing total planned capacity to 7 GW and committed investment to $400 billion over three years.
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Stargate's Abilene Flagship Opens
Facility LaunchFirst Stargate data center goes live in Abilene, Texas, with Oracle Cloud Infrastructure and Nvidia GPUs. Site demonstrates integrated data center and power generation model.
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Kairos Power Secures Tennessee Valley Authority Deal
Energy PartnershipTVA becomes first U.S. utility to sign offtake agreement with advanced nuclear plant. Will purchase 50 MW from Kairos Hermes 2 reactor for Google data centers starting 2030.
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Stargate Project Announced at White House
Initiative LaunchPresident Trump announces Stargate: $500 billion AI infrastructure joint venture led by SoftBank, OpenAI, Oracle, and MGX. Initial $100B commitment with four-year deployment timeline.
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Google and TPG Lead $800M Intersect Power Round
InvestmentGoogle and TPG Rise Climate invest $800 million in Intersect Power, partnering to deliver gigawatts of co-located data center and renewable energy capacity with $20B deployment target by 2030.
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Amazon Announces $500M+ Nuclear Initiative
Energy PartnershipAmazon unveils three nuclear agreements: Energy Northwest SMRs (960 MW), Dominion Energy Virginia project (300 MW), and $500M investment in X-energy targeting 5 GW by 2039.
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Google Partners with Kairos Power for 500 MW Nuclear
Energy PartnershipGoogle signs Master Plant Development Agreement with Kairos Power to deploy 500 MW of next-generation molten salt reactors by 2035, starting with 50 MW Hermes 2 reactor in Tennessee.
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Microsoft Signs Three Mile Island Nuclear Deal
Energy PartnershipMicrosoft announces 20-year power purchase agreement with Constellation Energy to restart Three Mile Island Unit 1, securing 837 MW of dedicated nuclear power starting 2028. First major tech company to revive mothballed nuclear plant.
Scenarios
Vertical Integration Accelerates: Tech Owns Energy by 2030
Discussed by: Goldman Sachs, IEA, Deloitte infrastructure analysts
Grid bottlenecks worsen as data center demand grows 165% by 2030. Tech giants abandon traditional utility relationships entirely, instead owning nuclear plants, solar farms, and battery storage co-located with data centers. Microsoft, Amazon, Google, and Meta collectively operate 20+ gigawatts of dedicated generation capacity—equivalent to 20 nuclear plants. This vertical integration mirrors Standard Oil's 1900s model: controlling the entire value chain from energy production through computing services. Utilities lose their largest customers. Tech companies become regulated energy providers in some jurisdictions. Smaller AI startups without energy access struggle to compete, accelerating consolidation. The energy bottleneck becomes a competitive moat for incumbents.
Grid Modernization Catches Up, Integration Stalls
Discussed by: RAND Corporation, utility industry forecasts
Federal infrastructure spending and streamlined permitting accelerate grid upgrades. New transmission lines and distributed generation reduce wait times from seven years to two. Nuclear construction costs fall as modular reactors scale. Tech companies realize owning power plants is capital-intensive and outside their core competency. Several high-profile projects face delays or cost overruns—Kairos reactors miss 2030 targets, Stargate scales back from $500B to $200B. Companies return to traditional power purchase agreements with utilities, having used ownership threats as leverage for better rates and guaranteed capacity. The vertical integration wave is remembered as a temporary response to a transient crisis, not a permanent restructuring.
Regulatory Backlash: Antitrust and Energy Market Fragmentation
Discussed by: FTC antitrust division, energy market regulators, Bloomberg analysis
Regulators recognize that tech companies controlling both AI infrastructure and energy generation creates monopoly risks. FTC challenges Alphabet's Intersect acquisition on vertical integration grounds. DOJ investigates whether exclusive nuclear contracts with Microsoft and Amazon constitute anti-competitive foreclosure—locking rivals out of power supply. Congress passes legislation requiring tech companies to sell excess power to the grid at regulated rates, preventing private energy networks. Some states ban co-located data centers from bypassing utility grids entirely. International AI competitors in Europe and Asia gain advantage from centralized energy planning. U.S. tech giants slow infrastructure buildout amid legal uncertainty, potentially ceding AI leadership.
AI Demand Plateaus Before Infrastructure Completes
Discussed by: Morgan Stanley tech analysts, AI skeptics
AI training efficiency improves faster than expected through algorithmic breakthroughs and specialized chips. By 2028, GPT-5-class models train on 1/10th the power GPT-4 required. Inference optimization and model compression reduce deployment costs 90%. Meanwhile, AI application revenue growth disappoints—enterprises slow adoption, consumer AI hits saturation, regulatory restrictions limit use cases. Tech companies find themselves owning billions in nuclear plants and data centers for demand that never materialized. Intersect's gigawatts sit partially utilized. Stargate becomes a cautionary tale of infrastructure overbuilding. The vertical integration bet backfires spectacularly, saddling balance sheets with stranded energy assets.
Historical Context
Standard Oil Vertical Integration (1870-1911)
1870-1911What Happened
John D. Rockefeller built Standard Oil into a monopoly by controlling every stage of oil production: wells, refineries, pipelines, railroads, and retail distribution. By 1904, Standard Oil controlled over 90% of U.S. oil production. Rockefeller made his own barrels, negotiated exclusive railroad rebates, and built storage facilities to eliminate costs and undercut competitors.
Outcome
Short term: Standard Oil achieved near-total market dominance and massive profitability through vertical integration, crushing independent refiners and setting prices unilaterally.
Long term: Supreme Court ordered the Standard Oil Trust dissolved in 1911 for operating as an illegal monopoly. The breakup created 34 companies that themselves quickly re-integrated vertically, establishing the modern oil industry structure.
Why It's Relevant
Tech giants are following Rockefeller's playbook: when you can't buy inputs at acceptable prices, own the suppliers. Alphabet buying Intersect mirrors Standard Oil buying pipelines and refineries—controlling energy supply to guarantee AI infrastructure at any cost.
Ford River Rouge Complex (1917-1928)
1917-1928What Happened
Henry Ford built the River Rouge plant as the most vertically integrated manufacturing facility in history. The complex processed raw iron ore and sand into steel and glass, assembled components, and shipped finished automobiles—all on one site. Ford owned iron mines, rubber plantations, timberland, and a railroad. At peak operation, raw materials entered one end and complete cars rolled out the other within 48 hours.
Outcome
Short term: River Rouge produced 75% of Ford's vehicles by 1927, delivering unprecedented cost control and production speed. Ford dominated the auto industry through the 1920s.
Long term: Post-WWII, Ford shifted to outsourcing as vertical integration became too capital-intensive and inflexible. By the 1970s, the model was largely abandoned. Modern auto manufacturers rely on supplier networks, not ownership.
Why It's Relevant
Microsoft and Amazon face Ford's dilemma: vertical integration solves immediate supply constraints but requires massive capital and operational complexity. If grid power becomes available again, will owning nuclear plants look like a costly distraction from their core business?
AT&T Bell System Monopoly (1913-1984)
1913-1984What Happened
AT&T's Bell System controlled all aspects of telecommunications: telephone manufacturing, research, network infrastructure, and service provision. The company operated as a regulated monopoly under the Kingsbury Commitment, later confirmed by the 1956 consent decree. Bell Labs developed the transistor, Unix, and C programming language while the parent company provided universal telephone service.
Outcome
Short term: Bell System achieved universal U.S. telephone service by the 1970s, with vertical integration enabling rapid technology deployment and infrastructure buildout.
Long term: Justice Department filed antitrust suit in 1974. Bell System broken up in 1984 into AT&T and seven regional companies, ending vertical integration. Breakup accelerated innovation as competitors entered equipment manufacturing and long-distance service.
Why It's Relevant
Tech companies building energy infrastructure risk antitrust scrutiny similar to AT&T's. If Google owns power generation, data centers, and AI services, regulators may see monopoly foreclosure—using control of one layer to dominate others. The Bell breakup suggests vertical integration eventually triggers government intervention.