Rising Water Demand from AI Data Centers
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 12 2026
0mins
Source: NASDAQ.COM
- Market Demand Surge: The expansion of AI data centers is significantly increasing water demand, which is expected to drive growth for water-related stocks like Xylem and American Water Works, although AI data centers represent a small fraction of overall water usage.
- Xylem's Performance Boost: Last quarter, Xylem's revenue grew 4% year-over-year to $2.4 billion, with net orders increasing by 9%, indicating ongoing innovation in water treatment and cooling technologies, positioning the company to benefit from future AI infrastructure investments.
- American Water Works' Strategic Acquisition: American Water Works saw operating revenue rise from $4.68 billion to $5.1 billion last year, and its merger with Essential Utilities enhances its competitiveness in the municipal water market, likely driving earnings growth.
- Caution for Investors: While rising water demand may boost related stocks, investors should be wary of potential AI bubble risks and the higher water needs of other sectors, necessitating a comprehensive evaluation of investment decisions.
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Analyst Views on AWK
Wall Street analysts forecast AWK stock price to fall
3 Analyst Rating
0 Buy
2 Hold
1 Sell
Moderate Sell
Current: 131.610
Low
122.00
Averages
129.00
High
139.00
Current: 131.610
Low
122.00
Averages
129.00
High
139.00
About AWK
American Water Works Company, Inc. is a water and wastewater utility company. The Company's primary business involves the ownership of utilities that provide water and wastewater services to residential, commercial, industrial, public authority, fire service and sale for resale customers. The Company also operates other businesses that provide water and wastewater services to the United States government on military installations, as well as municipalities. The Company operates its business through the Regulated Businesses segment. The Regulated Businesses segment includes subsidiaries that provide water and wastewater services to customers in 14 states. The Company's utilities operate in states such as Georgia, Hawaii, Indiana, Iowa, Kentucky, Maryland, Tennessee, Virginia and West Virginia. It also serves commercial customers, fire service customers, industrial customers, public authorities, and other utilities and community water and wastewater systems.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Community Engagement: Maryland American Water encourages customers to adopt simple water conservation practices, such as fixing leaks and turning off the tap while brushing teeth, to collectively protect this vital resource and raise public environmental awareness.
- Safe Medication Disposal: On National Prescription Drug Take Back Day, Maryland American Water reminds the public to safely dispose of unused medications, ensuring environmental safety and further promoting community environmental initiatives.
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- Employee Engagement Activities: To celebrate Earth Day, employees are participating in various environmental and volunteer initiatives, including clean-ups of the Occoquan River and highways, reflecting the company's commitment to environmental stewardship and watershed protection.
- Customer Water Conservation Advocacy: The company encourages customers to adopt simple measures such as fixing leaks and turning off taps while brushing teeth to protect water resources, emphasizing that small actions can lead to significant changes for ensuring clean water for future generations.
- History and Scale: Virginia American Water, a subsidiary of American Water, is one of the largest water companies in the U.S., with a 140-year history serving approximately 14 million people, showcasing its leadership in the water industry and commitment to its customers.
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- Community Engagement and Infrastructure Investment: Senior leaders shared expertise in community engagement, workforce development, PFAS treatment, and strategic infrastructure investment, emphasizing the importance of collaborating with local leaders to ensure the right investments for customers.
- Water Quality Protection and Infrastructure Needs: With regulated operations across 14 states, American Water plays a critical role in addressing infrastructure needs, protecting water quality, and supporting workforce development, demonstrating its responsibility and commitment in the water industry.
- Historical and Scale Advantages: As the largest regulated water and wastewater utility in the U.S., American Water has a 140-year history, serving approximately 14 million people, and leverages the expertise of its 7,000 professionals to ensure safe, reliable, and affordable water services for customers.
See More
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American Water Engages in Mayors Water Council Meeting
- Leadership Engagement: American Water participated in the 2026 Mayors Water Council Meeting, collaborating with local leaders and federal partners to address critical water issues, showcasing its regulatory operations across 14 states and its vital role in infrastructure needs and water quality protection.
- Community Engagement Strategy: CEO John Griffith emphasized the importance of interacting with local leaders to ensure informed investment decisions in water systems, thereby enhancing service reliability and safety to meet customer needs effectively.
- Knowledge Sharing: Senior leaders from American Water and Indiana American Water shared expertise on PFAS treatment, workforce development, and strategic infrastructure investment during the meeting, fostering collaboration and innovation within the industry.
- History and Scale: Founded in 1886, American Water has a 140-year history and serves approximately 14 million people, supported by 7,000 professionals dedicated to providing safe, reliable, and affordable drinking water and wastewater services.
See More
Virginia American Water Celebrates Earth Day with Community Engagement
- Commitment to Water Protection: Virginia American Water serves approximately 384,000 customers and is dedicated to protecting water sources through enhanced infrastructure and community engagement, reflecting the company's long-term commitment to environmental stewardship.
- Employee Participation Activities: To celebrate Earth Day, employees are engaging in various environmental, educational, and volunteer initiatives, showcasing the company's broader commitment to watershed protection in the communities it serves and raising public awareness about water resource conservation.
- Customer Water Conservation Advocacy: The company encourages customers to adopt simple practices such as fixing leaks and turning off taps while brushing teeth to help conserve water, emphasizing that small actions can lead to significant impacts and foster community collaboration in protecting water resources.
- Safe Medication Disposal Day: April 25 marks National Prescription Drug Take Back Day, and Virginia American Water reminds the public to safely dispose of unused medications at designated locations, further promoting community health and environmental protection.
See More
Maryland American Water Promotes Environmental Stewardship for Earth Day
- Water Resource Protection: Maryland American Water serves approximately 24,000 customers and is committed to safeguarding water sources like Winters Run and the Lower Patapsco reservoir to ensure safe and reliable water supply, thereby enhancing community water resource management.
- Infrastructure Investment: The company emphasizes the importance of protective measures before water reaches the tap, with employees strengthening infrastructure to support communities and ensure clean water for future generations.
- Community Engagement: Maryland American Water encourages customers to adopt simple water conservation practices, such as fixing leaks and turning off the tap while brushing teeth, to collectively protect this vital resource and raise public environmental awareness.
- Safe Medication Disposal: On National Prescription Drug Take Back Day, Maryland American Water reminds the public to safely dispose of unused medications, ensuring environmental safety and further promoting community environmental initiatives.
See More
Virginia American Water Celebrates Earth Day with Community Initiatives
- Water Resource Protection: Virginia American Water serves approximately 384,000 customers and is committed to ensuring safe and reliable drinking water by protecting sources like the Appomattox and Potomac Rivers, thereby enhancing infrastructure and community support.
- Employee Engagement Activities: To celebrate Earth Day, employees are participating in various environmental and volunteer initiatives, including clean-ups of the Occoquan River and highways, reflecting the company's commitment to environmental stewardship and watershed protection.
- Customer Water Conservation Advocacy: The company encourages customers to adopt simple measures such as fixing leaks and turning off taps while brushing teeth to protect water resources, emphasizing that small actions can lead to significant changes for ensuring clean water for future generations.
- History and Scale: Virginia American Water, a subsidiary of American Water, is one of the largest water companies in the U.S., with a 140-year history serving approximately 14 million people, showcasing its leadership in the water industry and commitment to its customers.
See More
American Water Engages in Mayors Water Council Meeting
- Participation in Mayors Water Council: American Water attended the Mayors Water Council Meeting on April 16-17, 2026, in Greenwood, Indiana, gathering mayors, city leaders, and federal partners to discuss critical water issues, showcasing the company's leadership in the water sector.
- Community Engagement and Infrastructure Investment: Senior leaders shared expertise in community engagement, workforce development, PFAS treatment, and strategic infrastructure investment, emphasizing the importance of collaborating with local leaders to ensure the right investments for customers.
- Water Quality Protection and Infrastructure Needs: With regulated operations across 14 states, American Water plays a critical role in addressing infrastructure needs, protecting water quality, and supporting workforce development, demonstrating its responsibility and commitment in the water industry.
- Historical and Scale Advantages: As the largest regulated water and wastewater utility in the U.S., American Water has a 140-year history, serving approximately 14 million people, and leverages the expertise of its 7,000 professionals to ensure safe, reliable, and affordable water services for customers.
See More
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- New Revenue Catalyst: Utility companies are experiencing a new revenue source driven by increasing energy and resource demands from data centers, which could not only boost stock prices but also maintain or even grow dividend payouts, enhancing investor confidence.
- Infrastructure Investment: American Electric Power plans to invest $72 billion in infrastructure over the next five years to support its operations and capitalize on the growth of the data center market, which is projected to rise from approximately $300 billion in 2026 to around $699 billion by 2034.
- Strategic Merger: The merger between American Water Works and Essential Utilities will enable the combined entity to meet the demand for water and cooling solutions from data centers, with expectations that the new entity will continue to follow American Water's dividend growth targets, further enhancing market competitiveness.
- M&A Potential: Black Hills is planning a merger with NorthWestern Energy Group, which, if approved, will create Bright Horizon Energy, expected to continue paying dividends with a current yield of 3.7%, the highest among the three highlighted companies, indicating strong cash flow and investment appeal.
See More
