Grid, Electrical Equipment Stocks up 140%+ Amid AI Mania in the Market – Markets Insider

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  • The AI frenzy will trigger a boom in power-grid and electric-equipment firms across the globe, JPMorgan said.
  • Some stocks are already up 140% year-to-date. The firm says AI will boost electric demand tenfold by 2026.
  • Power demand will further climb as nations race to reduce carbon emissions.

From microchips to cloud services, the investing frenzy around artificial intelligence has propelled numerous sectors to sky-high valuations. 

But the trend doesn’t end there. AI is also behind a lesser-recognized boom in power grid and electrical equipment firms, with some shares rising by triple-digit percentages, JPMorgan said in a note on Wednesday.

“Our analysts note that global grid/electrical equipment makers across the US, India, Korea and Europe have rallied ~20 to 140% YTD partly driven by continued increase in new orders as increasing development of AI and data centers fuels expectations of strong power consumption and rising electricity and equipment demand,” analysts wrote.

In fact, AI could spur tenfold growth in power demand by 2026, JPMorgan estimates, representing a crucial need for reliable electric grids, and the equipment that run them. Not only will the new technology require more data centers, but generative AI will push their power requirements three times over today’s standards.

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Global electric grid capital expenditures are forecast to grow over 5% annually through the decade, JPMorgan said, citing prior research it’s published.

Already, companies such as Taiwan’s Fortunate Electric and South Korea’s Hyundai Electric have soared year-to-date, gaining 142% and 121%, JPMorgan highlighted. Among covered firms in the US was Eaton, up 35% so far this year.

Aside from AI, such companies should also benefit from the global race to reach net zero emissions by 2050. To achieve carbon neutrality, an estimated $20 trillion in grid investment is required between 2022 and the mid-century.

Investors interested in the industry should watch for catalysts out of Asia, such as new orders guidance by Chinese firms and Chinese grid capex revisions in the third-quarter.  

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“Underinvestment in global grid capex over the past decade could bring strong demand for grid equipment, unlocking opportunities for Chinese exporters who have technical and cost advantages and lower geopolitical risk, our analysts note,” the bank said.

JPMorgan highlighted Sieyuan Electric, Huaming Equipment, and Hexing Electrical.

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