Entergy Will Power Google’s New Arkansas Data Center. The Stock Rises.

Google said it plans to invest $4 billion dollars in Arkansas, including the construction of a data center powered by a subsidiary of Entergy. (Courtesy Google)

Shares of Entergy climbed in premarket trading Friday after Google unveiled plans to built a big data center in Arkansas.

The facility is set to be constructed on more than 1,000 acres in West Memphis, and represents Google’s first in the state. Entergy Arkansas, a subsidiary of Entergy, will power the data center, with Alphabet-owned Google footing the energy costs.

The data center is part of a $4 billion investment in the state with a focus on cloud and artificial-intelligence infrastructure, Google said. State officials described it as one of the largest-ever investments made in Arkansas.

Google separately announced plans for a $25 million fund “to scale and accelerate energy affordability initiatives” in the surrounding area, saying the money will go toward home improvements and energy workforce development.

Entergy was up 2.8% at $96.22 on Friday, putting the stock on pace for a record high, according to Dow Jones Market Data. Shares of the electric power provider, which serves four states in the Deep South, have gained 27% this year.

It isn’t Entergy’s first partnership with a major tech player. Earlier this year, this company announced that it had broken ground on a major piece of grid infrastructure in Louisiana that would connect Meta’s newest data center in the state.

Entergy is just one of the energy providers that has worked increasingly with data-center operators, seeing an opportunity in AI’s appetite for power. Ohio-based American Electric Power has also been able to capitalize on that demand while pushing much of the cost of new generation and transmission onto the data-center operators rather than its normal customers.

AEP, which operates in 11 states, has seen so much demand from data-center operators that it plans to add 24 gigawatts of new load by 2030, up nearly 15% from previous estimates.

CEO and President William Fehrman said on the company’s latest earnings call that Texas was “clearly becoming the crypto center for us.” Cryptocurrency, like AI, is energy-intensive, requiring continuous computing power to mine new tokens and maintain networks.

Shares of AEP gained 1% to $114.58 on Friday. The benchmark S&P 500 index was up 0.5%.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com