Google Stock Gets Energized by $100 Billion Bet on Rust Power from Iron Batteries for Data Centers

Google is looking beyond the computer chip to solve its biggest problem: electricity. Google stock GOOGL -0.19% ▼ investors are watching a new energy deal with Minnesota utility company Xcel Energy XEL +0.67% ▲ that could change how the company powers its massive AI data centers. Picking this new tool that essentially turns rust into electricity helps Google ensure its AI servers never go dark, even when the sun isn’t shining.

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Iron Batteries Create a 100-Hour Power Safety Net

The biggest news in this deal is the move away from traditional lithium. Most big batteries used by tech companies today only last for four to eight hours. Google’s decision to use iron-air batteries provides a staggering 100 hours of backup power. This allows a data center to run on clean energy for several days at a time without needing the wind to blow or the sun to stay out.

These batteries work by using a chemical reaction involving iron, water, and oxygen. When the battery provides power, it turns the iron into rust. When it is time to recharge, electricity reverses that process and ‘de-rusts’ the metal. Because iron is everywhere and very cheap, these batteries could be ten times less expensive than the ones found in your phone or electric car.

Clean Energy Portfolios Impact Local Grids

Google is building a massive 1.9-gigawatt clean energy project with Xcel Energy. The integration of 300 megawatts of iron storage into this plan makes it 200 times larger than any previous project of its kind. Building its own power supply allows Google to reduce the strain on the local electric grid.

This matters because utility companies are worried about blackouts during extreme heat or high demand. Data centers that can store their own power are more likely to get fast-tracked for connection to the grid. For Google, this means they can get their new AI centers up and running much faster than competitors who are still waiting for traditional power hookups.

Lower Energy Costs Stabilize the Tech Giant’s Bottom Line

While most people focus on Google’s software, the cost of running data centers is one of the company’s biggest expenses. The shift toward cheaper iron technology helps protect the company from rising electricity prices. Form Energy, the startup building these batteries, has already raised over $1.2 billion and plans to go public in the future.

Adopting this rust technology early positions Google as a leader in green energy. This move helps the company meet its climate goals while also making its business more efficient. If this Minnesota project works, Google will likely use the same plan for its data centers all over the world.

Is Google a Good Stock to Buy?

Alphabet’s stock (GOOGL) continues to carry a Strong Buy consensus, based on 33 analyst ratings over the past three months. Out of those, 27 call it a Buy, while six recommend a Hold. None of the analysts currently suggest selling.

The average 12-month GOOGL price target sits at $382.81, which represents 23.13% upside potential.

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