AI Data Centers & EVs, Part 2: Energy for the Power Grid Expansion

Michael LebowitzAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

This article follows Part One, which discusses the massive investment dollars that will be spent expanding and modernizing the power grid to facilitate demand from AI data centers and EV users. With the broad macro investment theory laid out, we now explore which industries and companies will likely benefit from the coming changes to the power grid. Part Two focuses on the traditional energy suppliers that will fuel the power grid. The industries and companies are not presented in any particular order.

As you read, please consider that picking the "right" power grid stocks is difficult. In the short run, money flows into and from stocks, and sectors align with the popular narratives of the day, regardless of whether they prove correct. Narratives and the sentiment they spur can grossly distort a stock or industry's valuations and create overbought or oversold conditions. However, over the long term, profits supersede narratives.

This article presents a longer-term view. Some industries and stocks we mention may do very well in time but not immediately benefit from the coming power grid expansion.

Before starting, we address a reader's question regarding the electricity that bitcoin miners require.

Bitcoin Mining

After reading Part One, a reader asked if bitcoin mining contributes to the need to expand the power grid. The answer is yes -- and no. Yes, bitcoin mining requires a lot of electricity, but as a percentage of total power usage, it's not nearly as much as AI data centers and EVs will likely consume.

To put perspective on the amount of electricity that bitcoin miners use, we share some excerpts from a recent report by Paul Hoffman at Best Brokers.