Everyone Is Buying the AI Chips. Almost No One Is Buying the $20 Stock That Powers Them.

Research Desk · August 5, 2026

Power delivery, not chips, is the real bottleneck in the AI buildout. Photo via Wikimedia Commons. 

The market spent this week celebrating the AI trade. Fresh records fell as investors piled into the companies that design the chips and build the models.

Almost none of that attention reached the least glamorous link in the chain, the one that keeps turning out to be the real constraint: the electricity.

An AI data center is a warehouse full of chips that does nothing at all without power, in enormous quantity, delivered to a specific spot on the map. And power like that cannot be conjured on demand.

It takes years, permits, transmission lines, and a regulator's blessing to move hundreds of megawatts to a new customer. You cannot simply plug in 430 megawatts the way you plug in a laptop. Whoever already owns the grid where the power is cheap and the air is cold holds a choke point on the entire boom.

That is where an overlooked name comes in, one most investors have never typed into a brokerage app. MDU Resources (NYSE: MDU) trades around $20, carries a market value near $4 billion, and just finished reinventing itself as a pure-play regulated utility after spinning off its old construction and materials businesses.

It delivers electricity and natural gas to roughly 1.2 million customers across the Dakotas, Montana, and the upper Midwest. Its footprint happens to sit on top of exactly what AI builders are chasing: plentiful, low-cost power and a cold climate that slashes the single largest operating cost of a data center, cooling.

How a Boring Utility Gets Paid on the AI Boom

In a gold rush, you can bet on the prospectors or you can sell the water and the shovels. MDU sells the electricity and owns the wires.

But the more important detail is how a regulated utility actually makes money, because it is nothing like a normal company. A store earns more by selling more units. A regulated utility does not.

Instead, regulators allow it to earn a fixed percentage return on the money it sinks into poles, wires, substations, and generation, a pile of invested capital known as its rate base. The bigger that base, the bigger the guaranteed earnings stream on top of it.

So the incentive is unusual: a giant new customer that forces the utility to build a great deal of new infrastructure is a very good thing, because every dollar of that build enters the rate base and earns a return for decades. A 430-megawatt data center is precisely the kind of customer that forces a lot of building.

Think of MDU as the landlord who happens to own the only parking lot next to a stadium that just announced a thirty-year concert residency. The landlord did not have to become a rock star. It only had to own the right piece of ground at the right moment.

The Deal Wall Street Skimmed Past

The marquee example is Polaris Forge 3, a 430-megawatt AI campus that Applied Digital plans to build near Center, North Dakota. MDU's Montana-Dakota Utilities subsidiary has signed the electric service agreement to power it, with initial operations targeted for August 2027, pending approval from state regulators.

That is enough electricity to light roughly 400,000 homes, flowing to a single customer. And it is not a one-off: a data center near Ellendale is already showing up in MDU's electric results, evidence that North Dakota is becoming a magnet for large energy users rather than a curiosity.

Here is the honest nuance the headlines skip. Under the agreement, Applied Digital arranges to buy its own energy, so MDU is not pocketing a fat margin on the electrons themselves.

What MDU collects is the regulated return on all the grid it must build to deliver that power reliably, which is exactly the kind of recurring, multi-decade income a utility investor wants in the first place. The proof is already in the numbers: rate base climbed 16% in 2025, and management is funding a $3.1 billion capital plan over the next five years to keep that expansion going.

The One Number the Bulls Gloss Over

No honest write-up skips the blemish. MDU's most recent quarter was a stumble, with revenue around $606 million, down about 10% from a year earlier, an earnings miss, and a market that has let the stock drift since.

On top of that, the Polaris Forge 3 agreement still needs a green light from the North Dakota Public Service Commission before a single megawatt flows, and full operations are not expected until 2027.

This is the opposite of a lottery ticket. MDU is a steady 6% to 8% earnings grower with an unusually large call option bolted on. Anyone buying it expecting a 90% revenue quarter is buying the wrong stock.

A Fair Price With a Free Option

At roughly $20 against 2026 guidance of $0.93 to $1.00 in earnings per share, MDU trades near 21 times earnings. That is a premium to a plain-vanilla utility and a deep discount to anything with "AI" stamped on its pitch.

The bull case is straightforward: if the data-center pipeline converts, rate base keeps compounding and the 6% to 8% growth target understates the trajectory, which would make the average analyst price target near $23.50, about 15% above today, look conservative.

The bear case comes with a number too. Strip out the AI optimism entirely and value MDU as an ordinary utility at 16 times its roughly $0.96 guidance, and you land around $15, roughly 25% below today's price. That is the downside if Thursday's report disappoints again or the regulators drag their feet.

The bet is not complicated: you are paying a utility multiple, and the AI option is thrown in for close to free. The market has priced the shovels. It has not yet priced the power.

The Bottom Line

The crowd is paying up for the chips and the models. The one thing every last one of them physically requires, delivered where it is cheapest and coolest, is electricity, and that corner of the AI trade is still priced as if it were 2015.

MDU is a $20, barely-followed, pure-play utility that just became a gateway for gigawatts of data-center demand in one of the best power markets in the country, and it steps in front of investors with earnings this Thursday.

You are not paying a momentum multiple to own it. You are paying a utility multiple and getting the AI buildout as a bonus. Whether the market keeps ignoring that is the only real question left.