AI Power Crunch
Leo Gau@leogau
The idea
I believe the real near-term winners from AI aren't the chipmakers but whoever closes the gap between data center power demand and what the grid can actually deliver. So this basket spreads across three layers: companies selling power directly to data centers, the grid equipment makers with backlogs turning into revenue, and on-site power systems that let data centers skip years-long grid hookups. I weight it toward equipment and on-site power since those backlogs feel more immediate, and keep a small cash reserve to add if these stocks swing on any sign AI spending is cooling.
What it owns
- Turbines, transformers, switchgear and installation services face long lead times, so makers and installers of this equipment get priority from utilities and developers. · GE Vernova Inc.It manufactures large gas turbines for new power plants, a component currently in short supply with extended lead times., Vertiv Holdings CoIt supplies power distribution and cooling equipment installed inside data centers on nearly every major deployment., Eaton Corporation plcIt makes the electrical systems that form the backbone of buildings and grids, including transformers and switchgear that route power to data centers., Quanta Services, Inc.It contracts to build transmission lines, substations and grid infrastructure, the multi-year work that determines how quickly data centers can connect to the power system., Powell Industries, Inc.It builds custom switchgear, the heavy control equipment that manages power distribution at plants and large facilities, currently experiencing long lead times., Hubbell IncorporatedIt manufactures connectors and substation equipment that utilities need to expand and reinforce the electrical grid.37%
- Data centers that cannot wait years for grid connections are building their own power generation on-site, and these companies supply the equipment and fuel. · Bloom Energy CorporationIt makes fuel cells that generate power directly at data center sites, allowing customers to skip years of waiting for grid hookups., Caterpillar Inc.It sells generator sets and turbines for data center backup and primary power, a business growing faster than its traditional machinery operations., Cummins Inc.It manufactures diesel and gas generator sets that data centers install to run independently or remain operational during grid outages., Generac Holdings Inc.It produces larger generators for data centers, expanding beyond its home backup generator business into the commercial power generation market., The Williams Companies, Inc.It operates natural gas pipelines and is building gas supply infrastructure to serve data centers that generate their own power on-site.32%
- These companies own power plants and sell electricity under long-term contracts directly to data centers, locking in revenue from the surge in computing demand. · Vistra Corp.It operates gas and nuclear power plants in Texas and sells electricity under long-term contracts to data center operators in the region., Constellation Energy CorporationIt operates the largest US nuclear fleet, providing the steady baseload power that data centers require around the clock., Talen Energy CorporationIt owns nuclear and gas plants positioned beside data centers and supplies power directly to them under site-specific arrangements., NRG Energy, Inc.It owns gas power plants and sells electricity to data centers and other customers, positioning it to benefit from rising power demand in the sector.22%
- Cash9%