Market Rotates into a Power Theme

If you weren’t quick on your feet or in a diversified portfolio, you had trouble last week, as markets shifted away from the usual cool stocks and into nuclear/airlines/gold/silver/retail and out from EVs, semis, oils, China and solar.

It is clear to me we have several prevailing trends:

1. Denigration of the dollar, buoying precious metals/$BTC
2. Data center expansion caused by AI adaptation, powered by $NVDA, creating a scarcity of power, leading to massive demand for nuclear energy.
3. With the expansion of the data centers, traders are positioned into every aspect of this trade, from the server makers to the HVAC companies who cool these buildings to the construction companies who are building power plants and/or in the process of converting antiquated coal facilities to nuclear.

I am speaking of names like $CARR and $TT, who are old school HVAC but also help cool datacenters and have a massive tailwind in creating electric heat pumps for the EU, who is mandated to move away from fossil fuel generated heat by 2030. I am also talking about construction firms like FLR and J, or little known datacenter plays like $IRM who have been expanding feverishly into the space and using their decades of experience in archiving documents for Fortune 1000 companies and upselling them for hyperscale services. You also have companies like $POWL growing at a 50% clip, who are servicing both the power generation and datacenter markets.

I almost feel like this story is too good to be true and that it might be late; but then I view the numbers and listen to the conference calls and it becomes apparent that electricity demand is soaring and not coming down and machine learning technologies are quite literally ‘just getting started.’

Inside Stocklabs, I am building extensive lists to help me better understand the gravity of this shift and I feel this theme will be longer lasting than most people believe, which of course will be helped by a reduction in the cost of capital thanks to the FOMC.