AI Buildout Bottlenecks
saleiva@saleiva
−0.1%
since Oct 16
The idea
I believe AI's payoff depends on getting data centers built and wired up, which means demand for unglamorous stuff like copper, cable, transformers, switchgear and the electricians who install it. Instead of the well-known leaders that have already run up, this take owns the less-crowded suppliers behind them, spread across electrical contractors, copper producers, transformer and switchgear makers, and cable companies, with about 12% in cash to add on weakness.
What it owns
- There are not enough skilled crews to wire data centers and connect them to the grid, so contractors who have them are booked for years ahead. · Quanta ServicesIt is the largest builder of power lines and grid connections in the US, and data centers cannot open until someone hooks them up., Primoris ServicesIt builds power plants, substations and grid projects, and benefits when power and grid work keeps growing., MYR GroupIt fields the crews that build transmission lines and substations, and skilled line workers are a real shortage behind the buildout., IES HoldingsIt supplies the electricians and electrical systems that go inside data centers, which is exactly the labor shortage this take is built around., ArganIt builds natural gas power plants, and data centers need new power plants as much as they need grid connections., Sterling InfrastructureIt does site work for data centers including clearing and grading, which makes it one of the earliest to get paid when big tech breaks ground on new campuses.33%
- Every data center and power line needs substantial copper, and new mines take a decade to open, so supply cannot catch up quickly to rising demand. · Freeport-McMoRanAs the largest US copper miner, it benefits as long as data center and grid building keeps copper in short supply and its mines stay productive., Hudbay MineralsAs a mid-size copper miner growing its output, it gains more than larger peers when copper stays tight from data center and grid building., Southern CopperIt sits on the largest copper reserves of any listed miner, which matters if data center and grid building keep copper short for years ahead., Teck ResourcesIt has been growing its copper business, and that growth is worth more when data centers and power lines need copper faster than mines can supply it., Ero CopperAs a smaller copper miner, it moves more than larger peers when copper prices change, making it a focused bet on sustained scarcity through the buildout.20%
- Transformers and switchgear step power down and route it safely, and waits for them stretch a year or longer, giving makers room to raise prices. · Powell IndustriesIt builds custom switchgear that routes power into data centers and plants, and buyers wait a long time for delivery., HubbellIt makes the hardware utilities use to connect new load to the grid, and data centers are a major source of that new load., American SuperconductorIt sells gear that keeps grid power stable, which grows more valuable as large data center loads strain local grids., WESCO InternationalIt distributes the electrical and data equipment contractors need to build and wire data centers, so it gets paid on volume across the whole boom.20%
- Data centers need miles of power cable, conduit and fiber, and the makers of that wiring sell more with every new facility built. · nVent ElectricIt makes the enclosures, wiring gear and liquid cooling that go inside data center racks, and benefits as data center orders keep driving sales growth., AtkoreIt makes the conduit and wire that every data center and power upgrade must run through, which benefits as construction keeps order books growing., BeldenIt makes network and industrial cable, and earns its spot only if data center and network building shows up in its sales growth., CorningIt makes the optical fiber that connects servers inside data centers, and every new cluster needs far more of it.15%
- Cash12%