3 stocks that will benefit from the growing demand for energy and artificial intelligence
The two major megatrends that will shape the rest of this decade are artificial intelligence (AI) and electrification. These trends are intrinsically linked to the growing demand for electricity, presenting the energy sector with new challenges. In the US, for example, electricity demand is growing at a rate not seen in more than 20 years. According to Goldman Sachs, demand is expected to grow by 2,4 % a year until the end of the decade, compared with virtually zero growth in the previous decade.
This development entails the need for massive investment in new energy infrastructure, with an estimated USD 50 billion in electricity generation alone. Companies that focus on electricity-related infrastructure and technology could benefit significantly from this situation. Let's take a closer look at three interesting companies that are well prepared for this future.
Quanta Services $PWR+2.5%
Quanta Services
PWROne of the major players in the electric infrastructure space is Quanta Services. This company provides complete solutions for power grids, from design to construction to maintenance and repair. It focuses not only on traditional power sources, but also on renewable energy and underground infrastructure.
Quanta Services, which has a market value of $44 billion, has experienced steady growth in recent years. This is partly due to major infrastructure bills passed in the U.S. in 2021 and 2022. Additionally, the company continues to expand through acquisitions, such as its recent purchase of Cupertino Electric Inc. which specializes in modular data centers, an area directly related to the rise in demand for AI.
Emcor Group $EME+0.9%
Emcor Group is another major player in the electrical infrastructure space, offering a wide range of services from design to construction to maintenance. However, unlike Quanta Services, Emcor operates not only in the energy sector, but also in other areas such as solar systems, electric vehicle charging stations, and systems for industrial and commercial buildings.
Emcor has benefited from public investments in infrastructure, particularly under the Bipartisan Infrastructure Act of 2021. As a result, the company has benefited from growth in demand in various segments, from data centers to water systems. In addition, steady income from maintenance services (which accounts for about 30% of its revenue) ensures long-term stability and growth.
American Superconductor Corp. $AMSC+11.4%
At the other end of the size spectrum is the smaller American Superconductor Corp. AMSC has a smaller market capitalization, but it still shows strong revenue growth, up 33% in the most recent quarter.
AMSC specializes in technologies that improve the efficiency of power grids. Their know-how includes the use of superconductors, which can transmit more electricity with minimal losses compared to traditional materials such as copper or aluminum. In addition, AMSC is expanding its operations into the wind energy and military sectors, where it supplies, for example, systems that reduce ship detection.
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Source: Yahoo.