Many Stocks Quietly Rising up to 140% Amidst AI Craze; Investors Should Watch for Asian Catalysts

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JPMorgan: Many stocks quietly rising up to 140% amidst AI craze; Investors should watch for Asian catalysts

From microchips to cloud services, the artificial intelligence (AI) investment frenzy has driven up the valuation of various industries. However, the impact of AI does not stop there. It has also propelled the growth of certain overlooked companies in the market, particularly in the electrical equipment and power grid sectors. According to JPMorgan, stocks of these companies have even soared by triple digits.

JPMorgan analysts note that “global stocks of electrical equipment/power grids across the US, India, South Korea, and Europe have increased by 20% to 140% compared to the beginning of the year.” With the continuous development of AI and data centers, electricity consumption, demand for power, and electrical equipment are predicted to surge.

In fact, JPMorgan estimates that AI could increase electricity demand tenfold by 2026. This new technology not only requires more data centers but will also triple energy consumption compared to current standards.

Analysts further project that global spending on power grids is expected to grow by more than 5% annually throughout this decade.

JPMorgan emphasizes that stocks of companies such as Fortune Electric from Taiwan (China) and Hyundai Electric from South Korea have skyrocketed by 142% and 121%, respectively, since the beginning of the year. In the United States, Eaton’s stock has surged by 35% year-to-date.

JPMorgan: Many stocks quietly rising up to 140% amidst AI craze; Investors should watch for Asian catalysts

Apart from AI, companies related to electricity will also benefit from the global race towards achieving net-zero emissions by 2050. To reach carbon neutrality, significant investments of approximately $20 trillion will be needed for the power grid from 2022 to the mid-century.

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Investors interested in this sector should keep an eye on Asian catalysts. For example, new orders from Chinese companies and adjustments to China’s power grid investment in Q3 are worth considering.

JPMorgan analysts point out that the recent global shortfall in power grid investments could create new demand for electrical grid equipment. This poses an opportunity for Chinese exporters who have technological advantages, competitive prices, and lower political risks. Among them, JPMorgan particularly highlights the potential of Sieyuan Electric, Huaming Equipment, and Hexing Electrical.

According to MI