Texas Pacific Land (NYSE: TPL) doesn’t make a single chip, write a line of code, or run a data center. It owns dirt — about 880,000 acres of it, mostly spread across the Permian Basin of West Texas. And yet it has been one of the market’s best-performing stocks of 2026, with shares up about 38% year to date, even after pulling back from a gain of about 91% at their late-February peak. That leaves the S&P 500‘s roughly 7% rise far behind.
So how does a land-and-royalty company become one of the year’s hottest plays on artificial intelligence (AI)? And can the run last?
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A landlord, not a driller
Texas Pacific Land traces its roots to an 1880s railroad bankruptcy that left it holding millions of acres of Texas land. Today, it is one of the largest landowners in the state, and it makes money in two main ways. Its land and resource management business collects oil and gas royalties from the energy companies that drill on its acreage, plus fees for the pipelines, roads, and power lines that cross it. Its water business, Texas Pacific Water Resources, sells water to those same drillers and earns royalties on the water they pull up alongside oil.
The key is that the company doesn’t drill or operate wells itself. It owns the ground and collects the payments — a model that produces enormous margins and demands little spending. In 2025, Texas Pacific Land generated $798 million in revenue and $481 million in net income, along with $498 million in free cash flow — all while carrying no debt. Oil and gas royalties supplied about $412 million of that revenue, and the water business added about $308 million.
The momentum carried into this year. First-quarter revenue rose 21% year over year to a record $237 million, and earnings per share climbed to $2.07 from $1.75 a year earlier.
Where the AI thesis comes in
The same West Texas acreage that sits on top of oil and gas offers the three things an AI data center needs most: cheap land, water for cooling, and access to power. The Permian produces enormous volumes of natural gas, and developers are increasingly building their own gas-fired power plants next to data centers rather than waiting years to plug into the grid.
Texas Pacific Land owns the ground beneath much of that opportunity. In June, it agreed to provide surface acreage and brackish groundwater to Chevron for Project Kilby, a large power generation facility that will support a customer data center in Reeves County, Texas. And late last year, it invested $50 million in Bolt, an AI infrastructure company chaired by former Google chief executive Eric Schmidt, taking an equity stake and the right to supply water to Bolt’s projects. Further, in Q1, it agreed to sell a parcel for about $43 million, paid out over roughly 20 years, tied to a separate data center and power project, along with a water supply agreement.
