① The market generally anticipates that the development of artificial intelligence and data centers in the US will lead to a surge in electricity demand; ② the shares of Korean electrical equipment manufacturers became one of the biggest winners in the country's stock market this year; ③ analysts believe that due to the aging and inefficiency of the US power grid, demand for equipment in the US is expected to be particularly strong.
Financial Services Association, April 9 (Editor: Huang Junzhi) This year, with the continuous output of the artificial intelligence (AI) boom, global related stocks, typified by US stocks, recorded astonishing gains.
Among them, it is worth mentioning that the market generally expects that the development of artificial intelligence and data centers in the US will lead to a surge in electricity demand, and the shares of Korean electrical equipment manufacturers “won” and became one of the biggest winners in the Korean stock market this year.
HD Hyundai Electric Co., which produces power transformers, switchgear, and generators, has risen nearly 167% this year, making it the best-performing company in the KOSPI component of the Korea Composite Stock Price Index.
Over the same period, the stock price of Hyosung Heavy Industries Corp. (Hyosung Heavy Industries Corp.), which produces and sells transformers, generators, and other related products, has almost doubled. ; The stock price of LS Electric Co., Ltd. (LS Electric Co.), a power and automation solutions provider, rose nearly 70%.
Their impressive rise indicates that the industry will be a major beneficiary of surging electricity demand for artificial intelligence applications, data centers, and other digital services. Demand for power equipment in the US is expected to be particularly strong given the aging and inefficiency of the US grid.
“Power equipment stocks in Asia are a huge theme due to artificial intelligence,” said Jae Lee, chief investment officer at Timefolio Asset Management in Singapore. “There is a severe shortage of electricity, and America's electricity infrastructure is too old.”
Steve Eisman (Steve Eisman), the prototype of the movie “The Big Short,” previously pointed out that the new microchip technology to run artificial intelligence requires three times more electricity than traditional CPUs. Also, new GPUs are hotter than traditional hardware, and data centers need better cooling systems. All of this will encourage the US to spend more to improve the power grid.
Meanwhile, J.P. Morgan predicts that by 2026, artificial intelligence may trigger a tenfold increase in electricity demand.
On the other hand, the popularity of the Korean power equipment industry is also related to Samsung Electronics Co. (Samsung Electronics Co.) It is related to orders for Korean enterprise groups such as Hyundai Motor Co. (Hyundai Motor Co.), and LG Energy Solution Ltd., to build new production facilities in the US.
Lee said that Korean manufacturers of transformers and other related equipment have gone from having almost no overseas business to now generating about 60% to 70% of their revenue from the US. He said their “substantial” increase in profit margins highlights this change.
“There is a huge demand to upgrade the US power infrastructure, and US customers are placing large orders with Korean power equipment companies,” Lee said.
Yoon Joonwon, fund manager of asset management company DS Asset Management Co. said, “In the age of artificial intelligence, electricity shortages are seen as part of a structural supercycle. While these stocks seem a bit overheated in the short term, betting on these companies is right because they are still undervalued.”