In a strategic move to control a critical component of artificial intelligence infrastructure, Alphabet Inc. has announced a definitive agreement to acquire Intersect Power, a major U.S. developer of energy and data center projects. The transaction, valued at $4.75 billion in cash plus the assumption of existing debt, represents a significant pivot for the Google parent company as it seeks to secure its own affordable and scalable power supply for burgeoning AI workloads.
The Core Motivation: Energy as a Strategic Bottleneck
The global race for AI supremacy is increasingly being fought not just over algorithms and semiconductors, but over access to vast amounts of reliable electricity. Data centers, the engines of AI, are consuming power at an unprecedented rate. Current estimates indicate U.S. data centers use approximately 6% of the nation’s electricity, a figure projected to reach 11% by 2030. This surge is straining power grids, causing connection delays, and placing immense pressure on utility providers.
Alphabet’s acquisition is a direct response to this emerging constraint. By moving from being a mere power customer to an integrated owner-operator of generation assets, the company aims to bypass lengthy grid connection processes and capacity limitations. This control allows Alphabet to dictate where and how quickly new AI capacity comes online, providing a potential competitive edge.
Details of the Intersect Power Acquisition
The deal, one of Alphabet’s larger recent transactions, is expected to close in the first half of 2026, pending regulatory approvals. While Alphabet was already a minority investor and partner in Intersect, the full acquisition brings planning, design, and integration of energy and data center projects directly in-house, aligned with Alphabet’s internal AI roadmap.
Key assets acquired include:
* Intersect’s development platform and its workforce.
* Several gigawatts of energy and data center projects in planning or under construction.
* Projects already under development and contractually bound to Google.
* Approximately 7.5 gigawatts of operational solar and storage capacity.
* An additional development pipeline of roughly 8 gigawatts.
* Access to U.S.-based energy facilities valued at around $15 billion that are either operational or under construction.
Not all Intersect assets are included. Existing facilities in Texas, along with ongoing and planned projects in California that serve other customers, will remain in a separate, standalone company. This entity will continue to be backed by investors such as TPG Rise Climate, Climate Adaptive Infrastructure, and Greenbelt Capital Partners.
Post-acquisition, Intersect Power will operate as a distinct unit under its established brand, led by founder and CEO Sheldon Kimber, while working closely with Google’s technical infrastructure teams.
Financial Strength and Investment Context
Alphabet approaches this purchase from a position of robust financial health. For the third quarter of 2025, the company reported:
* Consolidated revenue of $102.3 billion, a 16% year-over-year increase.
* Google Cloud revenue of $15.2 billion, growing 34%.
* Operating income of $31.2 billion.
* Net income of $35 billion, up 33% compared to the prior year.
Should investors sell immediately? Or is it worth buying Alphabet?
Concurrently, Alphabet has raised its 2025 investment forecast. Expected capital expenditures (CapEx) now stand between $91 and $93 billion, with a substantial portion directed toward expanding AI infrastructure—encompassing data centers, networks, and now, energy assets.
The market has responded positively to this aggressive investment strategy. Alphabet shares have gained approximately 40% over the past twelve months and are up about 42% year-to-date, trading just 6% below their 52-week high.
Competitive and Regulatory Implications
The AI infrastructure landscape is fiercely competitive. Rival OpenAI has reportedly secured commitments exceeding $1.4 trillion for future data center and energy projects. Other competitors face tangible hurdles; Amazon recently withdrew a $150 million construction advance for a planned 11-gigawatt data center project due to challenges in securing adequate power.
The Intersect deal may also confer a regulatory advantage. As analyst Ben Hertz-Shargel of Wood Mackenzie notes, arrangements where a third-party like Intersect powers a Google data center can sometimes be challenged locally as infringing on utility monopolies. Operating data centers with self-generated power significantly reduces these regulatory constraints, potentially shortening permitting timelines and granting Alphabet more freedom in selecting new site locations.
The Broader Industry Backdrop
This transaction occurs amid a massive global investment wave in data centers. S&P data indicates $61 billion was invested worldwide in data centers during 2025, with a sustained construction boom driven primarily by AI applications. McKinsey consultants project that data centers will require investments of around $6.7 trillion by 2030 to meet growing compute demand, with global electricity consumption more than doubling from 415 terawatt-hours in 2024 to 945 terawatt-hours by 2030.
In this environment, access to large-scale, reliable, and clean energy has evolved from a cost consideration into a definitive strategic bottleneck—and thus, a key competitive lever.
Outlook: Gaining an Edge Through Vertical Integration
By following the industry pattern of vertical integration into energy, Alphabet is addressing a fundamental bottleneck. The company’s strategy underscores that the secured access to scalable power is becoming as critical as computing hardware in the AI race. Owning, rather than just contracting for, energy assets provides the flexibility to build infrastructure precisely where and when it is needed. As AI workloads continue their explosive growth, this control over power could translate into a decisive market advantage.
Ad
Alphabet Stock: Buy or Sell?! New Alphabet Analysis from December 23 delivers the answer:
The latest Alphabet figures speak for themselves: Urgent action needed for Alphabet investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from December 23.
Alphabet: Buy or sell? Read more here...
