How this 19th-century land owner stocks grew nearly 200% in 2024 on AI boom

Texas Pacific Land Corp. (TPL), a land company rooted in the Wild West era, has emerged as an unexpected beneficiary of the artificial intelligence (AI) boom, with its stock skyrocketing 193% this year to $1,571.77 as of Tuesday.

The Dallas-based company, which owns 873,000 acres in the Permian Basin, saw its market capitalisation reach nearly $40 billion, overtaking industry heavyweights like Halliburton and State Street Corp. The stock jumped 14% last Friday following the announcement that TPL would replace Marathon Oil Corp. in the S&P 500 index.

Founded in 1888 to repay bondholders of a defunct railroad venture, TPL generates revenue through oil and gas royalties, land leases for drilling, and services such as wastewater disposal and water sales. Recently, it has expanded into hosting bitcoin mines and renewable energy projects.

The surge in TPL's stock reflects growing investor confidence in the company's ability to tap into AI-driven demand for energy and space. Data centres, crucial for supporting AI applications, require vast tracts of land and cheap, abundant power.

"There's a lot of conversations taking place within the industry and definitely within TPL" about leasing land to data centres, TPL CEO Tyler Glover said in a recent investor call.

"We feel that we're positioned as well as anyone in West Texas to provide land and water solutions as those opportunities unfold."

Tech giants like Alphabet, Microsoft, and Amazon are expected to spend more than $200 billion next year, Bloomberg data shows, much of it on data centres. Data centre power requirements are projected to increase by 170% by 2030, according to Goldman Sachs, as a ChatGPT query uses nearly ten times as much electricity as a Google search.

"This increased demand will help drive the kind of electricity growth that hasn't been seen in a generation," the bank said in May.