Artificial intelligence will drive an unprecedented natural-gas deficit, this investor warns. Here are the stocks to buy before the crunch

“Natural gas, which [represents] over 40% of U.S. power generation, is imminently going to become the most important fuel in the country,” Smith told the Invest Like the Best podcast. His firm spent 18 months researching the natural-gas landscape, concluding that a shortage is unavoidable by the second half of 2028.

That’s when the U.S. will begin eating into its “working gas storage, which is the nexus of supply and demand in the country,” with higher electricity prices to follow into 2030.

The U.S. has enjoyed plentiful supply since 2010, when domestic shale production came on the scene. The country currently exports 15 billion cubic feet (Bcf) a day, out of its 110 to 112 Bcf daily production, and it’s scheduled to export up to 35 Bcf daily by the end of 2030.

Chronometer Partners predicts U.S. natural-gas production will climb from 112 Bcf to 132, tops by the fourth quarter of 2030 but sees a deficit of more than 5 Bcf per day “before the full force of AI demand.”

Cutting off exports isn’t feasible due to the tens of billions of dollars in project financing and contracts linked to LNG projects, he said. Extracting more is tricky, as wells naturally lose pressure over time, and producers need years of build-out to get to that supply, as they face environmental permitting and other regulations, he said.

Smith warned of inertia around the understanding of natural gas as a primary power provider for AI. “We think that complacency is going to take us right up to the point where it’s too late,” he said.

The curve for natural-gas prices is flat — they look fairly consistent — which Smith blames on past abundance.

“That’s despite all these AI compute announcements, what all of the companies are doing for their investments,” he said. “Gas has lulled everybody to sleep, but what happens is these structural things start to fall into place in 2027-2028, and we start to draw [down] meaningfully in the middle of 2028.”

As for how to invest, Smith said he sees “clear natural-gas-producer winners,” such as upstream company Expand Energy which controls some of the highest rock quality — meaning the natural gas can be accessed faster and at less expense. Smaller competitor Range Resources meanwhile, has “significant room to grow production.”

He also likes some solar assets on the view that solar prices will rise along with natural-gas and electricity prices, he said. Well-positioned companies include XPLR Infrastructure and Clearway Energy he said. Sales of solar panels are likely to climb as the only way for consumers to offset rising electricity prices, he added.

As the gas deficit likely gets worse in 2031, 2032 and beyond, “the only viable solution is to build large-scale nuclear as fast as possible, which would mean it needs to come on in 2033 or 2034,” he said. Large-scale companies like Cameco can achieve that goal and are better than smaller-scale names. He also flagged BWX Technologies which is a primary supplier of nuclear hardware for the U.S. Navy.

Losers — outside of the consumer — include manufacturers of gas turbines such as Caterpillar and fuel-cell generators such as Bloom Energy which have ridden the AI infrastructure boom, he said. As natural-gas supply starts to hit a crunch and gets expensive, orders for their products could “slow meaningfully,” he warned.

Hyperscalers could also be hurt, as they currently budget about 10% of their costs for energy, he said. “If you plug in all of this compute and it’s gas-powered and we think gas could double or triple structurally, even without weather, it could end up being 20% or 30% of the cost of compute by 2029,” said Smith.

The markets

U.S. stocks are mostly lower at the open, led by tech. Gold and silver prices are climbing. Oil prices surged to a six-week high on continued U.S.-Iran fighting.

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