December 23, 2025 | The AI Supercycle Is Repricing Natural Gas – Here’s Why It Matters for Investors

For years, natural gas was seen as a temporary ‘bridge fuel’ – cheap, abundant, and eventually replaced by renewables. That story is changing fast.

By late 2025, one fact has become clear: energy is the limiting factor for AI growth. For retail investors, the story has shifted from ‘green at any cost’ to ‘reliable power at any scale’. Over the next decade, natural gas is no longer just a commodity – it’s becoming the backbone of the digital economy.

1. Reliability Comes First – Power Demand Is Back

AI data centres can’t afford outages. Losing AI leadership could cost companies trillions, and even one hour of downtime can mean tens of millions in losses. Because of that, Big Tech is changing its strategy.

Instead of waiting on complex renewable builds and grid upgrades, companies are prioritizing reliable, always-on power.

As the chart above shows, after nearly a decade of flat electricity demand, US power consumption is rising again. Major banks like Goldman Sachs and Wells Fargo now expect natural gas to supply about 60% of this new demand, because it’s:

• Cheap
• Dispatchable (available on demand)
• Fast to build

Simply put, no other energy source checks all three boxes.

2. The Nuclear Bridge: Bullish, But Distant

While we are incredibly bullish on Nuclear Energy as the ultimate, carbon-free solution for AI, investors must face a time-based reality: nuclear takes time. Whether it’s restarting retired plants like Three Mile Island or the deployment of Small Modular Reactors (SMRs), the lead times are measured in decades, not months.

A gas turbine can be deployed in 2–3 years, whereas new nuclear capacity often requires 10–15 years for permitting and construction. Nuclear is the long-term destination, but Natural Gas is the mandatory vehicle that gets us through the next 10 years of explosive AI growth.

3. A Supply Squeeze: AI Demand Meets LNG Exports

Until recently, the US gas market depended on weak domestic demand to justify huge LNG exports. AI changes that equation.

We’re now facing two powerful demand forces at the same time:

• LNG exports: New export terminals are coming online through 2027.
• AI data centres: Massive facilities are competing for the same natural gas at home.

Whether the US keeps more gas domestically for ‘AI and compute security’ or continues exporting overseas, the outcome for investors is similar: tight supply.

This competition has likely ended the era of $2 natural gas.

4. A Higher Price Floor Into 2030

Natural gas earned its ‘widow maker’ nickname from violent price swings, but Wall Street now sees that label as increasingly less appropriate. Rather than viewing higher prices as short-lived spikes, analysts now project a more stable, higher long-term price floor supported by structural AI-driven demand.

Several major institutions have raised their 2030 price outlooks:

• Goldman Sachs: $4.50–$5.50 (driven by AI adding ~3.3 Bcf/day of demand)
• EQT (CEO): $5.00–$6.00 (domestic ‘energy sovereignty’ for AI)
• Wells Fargo: ~$4.80 (grid constraints force more on-site gas power)

For investors, this suggests today’s prices may be closer to the bottom than the top.

5. How the Trade Is Playing Out in the Real World

Investors should watch for AI companies moving ‘upstream.’ They are no longer just software firms; they are becoming energy players as well. Data centres are increasingly locating:

• Near gas wells
• Along major pipelines
• Beside dedicated gas-fired power plants

Instead of treating energy as a utility expense, AI companies now see fuel and power as part of their core technology stack. Long-term, fixed-price contracts benefit the gas producers, pipelines, and infrastructure owners who control supply.

The Bottom Line

We’ve moved from a world with ‘too much gas and not enough demand’ to one with not enough gas to power intelligence growth.

The ‘bridge fuel’ isn’t going away – it’s becoming wider, more valuable, and more strategic.

For retail investors, this means the long-term value of natural gas assets will likely be permanently re-rated higher as AI turns energy reliability into a competitive advantage.

Martin Straith December 23rd, 2025

Posted In: The Trend Letter

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