The AI chip hegemon named “Earth's Most Important Stock” by Wall Street giant Goldman Sachs$NVIDIA (NVDA.US)$The company's performance data for the first fiscal quarter of fiscal year 2025 (ending April 28, 2024) and the performance outlook for the next fiscal quarter will be announced in the early hours of Thursday morning, Beijing time, and a performance conference call will be held at around 5 a.m. Nvidia's earnings report unquestionably relates to the belief of global technology stock investors in AI. Its financial data and performance prospects for the next fiscal quarter directly determine the stock price momentum of global technology stocks in at least the short to medium term. However, it is worth noting that this time, the investors behind power stocks and renewable energy stocks, which have soared this year, are also fully focused on Nvidia's earnings report.

Currently, Wall Street analysts generally expect Nvidia's total revenue for the first fiscal quarter to be about 24.6 billion US dollars, an increase of more than 240% year over year; earnings per share under NON-GAAP standards are expected to increase 418% year over year to 5.60 US dollars, indicating that analysts are very optimistic about Nvidia's performance. Furthermore, Wall Street bankers have recently been generally bullish on Nvidia's stock price trend over the next 12 months. Goldman Sachs is bullish to 1,100 US dollars (as of the US stock close on Tuesday, Nvidia's stock price closed at 953.86 US dollars), Wells Fargo is bullish to 1,150 US dollars, and Keybanc is bullish to 1,200 US dollars.

Since 2024, the utilities sector of the global stock market has also greatly benefited from Nvidia's strong performance in recent quarters. Of the US stock market$Utilities Select Sector SPDR Fund (XLU.US)$Since this year, it has risen by nearly 20%, outperforming the competition by a large margin$S&P 500 Index (.SPX.US)$This ETF mainly focuses on allocating electricity stocks, so whether Nvidia's performance can continue to soar will directly determine the trend of power stocks.

Specifically, the categories with the strongest gains in the utility sector were electricity stocks and renewable energy stocks. The main logic behind it is that these two major categories are regarded as one of the biggest beneficiaries of the unprecedented boom in AI deployment by global enterprises. After all, the power supply foundation is inseparable from the power supply foundation behind the exponential expansion of the scale of AI chips. This is also the origin of the market view that “the end of AI is electricity.”

In Europe, investors are now clearly paying more attention to companies and industries that could be the long-term beneficiaries of artificial intelligence. Bernie Ahkong, chief investment officer at UBS O'Connor Fund (UBS O'Connor Fund) Global Multi-Strategy Alpha, said: “The first phase of artificial intelligence is clearly a chip maker like Nvidia. However, we are already seeing a second wave shifting to companies that actually supply hardware components for data centers. Over the past few weeks, we've probably only just begun the third phase of utility companies represented by electricity companies.”

Strategists at Bank of America, a major Wall Street bank, wrote in a report on Monday that the influence of the AI boom is expanding across the board to many levels, such as commodities, electricity, and renewable energy. Nvidia's performance represents no longer a chip company, but the “most important indicator” of whether this unprecedented AI boom that has spread to the world can continue.

“The end of AI is electricity” continues to ferment! Electricity stocks and renewable energy stocks join forces to boom

The strongest gains in electricity stocks and renewable energy stocks this year began in April. The AI boom and risk aversion factors jointly drove the rise in these two major categories. In the US stock market, since the US stock benchmark index, the S&P 500 (S&P 500), hit a recent bottom on April 16, utility stocks have been rising. Utility ETF (XLU.US), which mainly focuses on electricity stocks, has risen by nearly 15%, accounting for most of the ETF's nearly 20% increase so far this year. Among them, American power giants$Vistra Energy (VST.US)$ The increase during the year was an astonishing 145%.

In the European stock market, utility stocks are also the core driving force behind the recent continuous upward trend of the European stock benchmark stock index, the Stoxx 600 Index. Recently, it has even strongly led the benchmark index to record highs. Italian power giant ENEL SPA's stock price has risen more than 20% since the Stoke 600 index hit a phased low in April, contributing to almost all of the gains so far this year. British power giant National Grid has risen more than 15% since its phased bottom in April.

In the Hong Kong stock market,$CHINA POWER (02380.HK)$The stock price has risen more than 23% since this year, including more than 12% since April. Another power giant$CHINA RES POWER (00836.HK)$The increase since this year has been as high as 38%. The power sector is undoubtedly one of the most popular sectors in Hong Kong stocks moving towards a technical bull market since this year. Capital is no less popular than Internet tech giants such as Tencent and Alibaba.

Renewable energy stocks are also a stock category that has greatly benefited from the AI boom. In US stocks, the leader in solar energy$First Solar (FSLR.US)$It closed up 8.03% to $212.11 on Tuesday. It has risen more than 23% since this year, leading the S&P 500 index in terms of gains across the board. UBS, a major international bank, previously released a report saying that First Solar is “an overlooked direct beneficiary” of the increase in demand for clean electricity driven by artificial intelligence (AI), reaffirmed the stock's “buy” rating and raised its target price for the next 12 months from $252 to $270.

Data centers are critical to the full rise of generative artificial intelligence such as ChatGPT. As market demand for AI data centers accelerates, demand for energy from data centers that are already “power-eating giants” is expected to surge. The International Energy Agency predicts that by 2026, the total electricity consumption of global data centers will increase from about 460 terawatt-hours in 2022 to at least 1,000 terawatt-hours.

The three leaders in the AI field, Microsoft, Amazon, and Google, have shown “exponential” trends in the scale expansion of their respective AI data centers in recent years. AWS, the cloud computing division of Amazon, recently announced a major investment plan. It is expected to invest up to 7.8 billion euros (about 8.44 billion US dollars) in Germany by 2040 to specifically build the European AI cloud computing infrastructure, which is the core infrastructure for the company's artificial intelligence services; in January of this year, Amazon announced plans to invest 2.26 trillion yen (about 15.24 billion US dollars) in Japan by 2027 to expand the scope of AI cloud computing infrastructure covering the whole of Asia. Amazon also announced plans to invest $9 billion to expand its cloud computing infrastructure in Singapore over the next four years. This investment will double AWS's investment in Singapore and is expected to meet the growing demand for cloud computing services from Asia Pacific customers while accelerating the adoption of artificial intelligence.

According to a research report released by Goldman Sachs earlier this week, AI is expected to drive a crazy 160% increase in data center electricity demand by the end of 2030. Goldman Sachs predicts that in order to support AI data centers alone, US power utilities will need to invest approximately $50 billion in next-generation power generation capacity.

“On average, AI services such as ChatGPT queries and inference require almost 10 times as much electricity as normal Google searches. Amidst this difference, how America, Europe, and the world will consume electricity — and how much it will cost — is about to drastically change,” Goldman Sachs said.

“The demand for power in data centers has been very stable over the years, even as their workloads have increased. Now, as the rate of efficiency in electricity use slows and the AI revolution begins, we expect data center power demand to grow 160% by 2030,” Goldman Sachs added.

According to forecast data from the Data Center Standards Organization and the Uptime Institute, the share of artificial intelligence business in global data center electricity consumption is expected to soar from 2% to 10% by 2025.

Data centers alone are expected to triple their share of electricity consumption in the US, from 126 terawatt-hours in 2022 to 390 terawatt-hours in 2030, according to Boston Consulting's forecast data. Terawatt-hours are used to describe the largest electricity levels, and are usually used for national-level energy statistics, planning and evaluation of large-scale energy projects. Large industrial facilities, such as super steel plants, may consume less than 10 terawatt-hours of electricity in a year.

The main logic behind the market's pursuit of renewable energy stocks is that under the global decarbonization trend, renewable energy may be the most important source of power generation, or not even one. According to the latest statistics from Ember, an energy think tank, as the pace of expansion and growth of renewable energy sources such as wind energy and solar energy continues to far exceed traditional fossil fuels such as coal, the share of renewable energy in the global electricity scale rose to a record 30% last year, and the think tank expects this trend to continue to accelerate this year.

In order to fully control carbon emissions, the global shift to renewable energy has gradually accelerated in recent years, which means that renewable energy generation is expected to continue to expand under the energy transition trend. According to information, the International Energy Agency (IEA) predicts in a report that the share of renewable energy generation in global power generation will exceed one-third by 2024. The International Energy Agency predicts that renewable energy will partially cover the expected increase in electricity demand from 2023 to 2024. It is expected that by 2024, the share of renewable energy generation in global power generation will exceed one-third; according to weather conditions, 2024 is likely to be the first year that global renewable energy generation exceeds coal power generation.

According to the IEA's main baseline forecast data, during the six-year period 2023-2028, the IEA expects the world to add up to 3,684 GW of renewable energy installed capacity, which means that the total amount of installed renewable energy in the world will be about twice the current scale. According to the IEA's forecast trajectory, it is expected that by 2030, the installed capacity will reach at least 9,000 GW, about 2.5 times the current level. The IEA predicts that by 2028, renewable energy will account for at least 42% of total global electricity generation.

On the eve of Nvidia's earnings report, Wall Street investment institutions are generally optimistic about performance and stock price trends

Wall Street price targets compiled by Tipranks show that before Nvidia released earnings reports, Wall Street investment institutions were generally optimistic about Nvidia's future stock price trend. The average target price, reflecting consistent expectations, was even as high as 105.7.76 US dollars, which meant that the next 12 months were at least close to 11% of potential upward space, and the highest target price was even as high as 1,400 US dollars.

Goldman Sachs expects global cloud computing giants, led by Amazon AWS and Microsoft, to continue to have high AI spending. Nvidia's current valuation looks very attractive. The agency raised Nvidia's target price from $1,000 to $1,100.

Goldman Sachs expects that the four major technology companies, Microsoft, Google, Amazon's AWS, and Facebook parent company Meta, will invest as much as 177 billion US dollars in cloud computing this year, far higher than the 119 billion US dollars last year, and will continue to increase to an astonishing 1950 billion US dollars in 2025; Goldman Sachs also expects that the vast majority of these giants' cloud computing expenses will be used to purchase Nvidia's newly released Blackwell series AI GPUs.

Goldman Sachs believes that extremely strong AI GPU demand is still the main growth engine for Nvidia's performance, and it is expected that data center performance in the second and third quarters of this year will fully benefit from the strong market demand for AI GPUs and NVIDIA InfiniBand networks. Goldman Sachs also anticipates quarterly increases in Nvidia's Q2, Q3, and Q4 data center business revenue of 10%, 17%, and 5%, respectively.

Another major bank, Wells Fargo, also raised Nvidia's target price sharply recently, saying that its data center business may grow dramatically. The bank raised Nvidia's target price sharply from $970 to $1,150. The analysis team led by Wells Fargo analyst Aaron Rakers recently wrote in an investor report: “We believe that demand data points (within the quarter), the drastic reduction in H100 GPU delivery time (about 10 weeks), combined with initial H200 shipments, cloud capital expenditure, and Nvidia's efforts to expand the 'national sovereignty level' of artificial intelligence all indicate that the data center is driving another (quarter) strong growth.”

Wells Fargo analysts said that increased spending by hyperscale companies such as Meta, Microsoft, Google, and Amazon AWS also bodes well. Analysts also said that Taiwan's export data has historically been “highly correlated” with Nvidia's data center revenue, while in the three months up to April, export data increased 360% year over year and 33% month over month. Furthermore, they expect Nvidia to announce “InfiniBand results in line with or stronger than expected,” and Nvidia's cloud computing power software revenue is expected to reach 2 billion US dollars per year by the end of this fiscal year.

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