BofA Securities analysts listed 19 investable options to gain exposure to the electrification theme of future technology.
According to BofA’s RIC Report, manufacturing, data centers, artificial intelligence, and the push for electrification will add great demand to “an already-tight electrical grid,” analysts said.
“Intermittent wind and solar cannot provide the needed power and tight supplies could lead to higher prices, bottlenecks, and outages,” wrote Strategist Jared Woodard.
He said that technology (XLK) investors may be pricing in energy suppliers that may not exist.
As an example, Nvidia (NVDA) is believed to sell $150B in data center GPUs by 2027. Analyst Vivek Arya said that would translate to about 3.5M GPU sales in the U.S.
“Each Blackwell AI GPU sold by Nvidia (NVDA) consumes up to 1200 watts of power, so 3.5M of them would consume 1.8 gigawatts of power in the U.S. alone,” said Woodard.
These “round one” winners from the new tech demand, such as data centers, hyper-scalers, and chipmakers, are already well-owned, he said. “Further investments in those beneficiaries should be made contingent on a realistic path to expand the power supply. In other words, the big new digital darlings can still win, but the ruddy old real world may have to win first.”
These are BofA Research’s top stocks and ETFs for North American power supplies to future technology:
Within commodities:
- Direxion Auspice Broad Commodity Strategy ETF (NYSEARCA:COM) - Top rated commodities ETF
- BHP Group Ltd. (BHP) - World’s largest copper mine
- Freeport-McMoRan Inc. (FCX) - Blue chip copper exposure
Within nuclear:
- Global X Uranium ETF (NYSEARCA:URA) - Top rated nuclear ETF with physical uranium exposure
- Cameco Corp. (CCJ) - Top uranium miner, growing contract book
Within utilities:
- Pinnacle West Capital Corp. (NYSE:PNW) - Exposure to attractive Sunbelt region
- Entergy Corp. (ETR) - Geographic mix exposure to data center demand
- Xcel Energy Inc. (XEL) - Retiring of coal plants creates new demand
- Public Service Enterprise Group Inc. (PEG) - Nuclear assets attractive tech and data centers
Within industrials:
- Eaton Corp. Plc (ETN) - Fast top-line growth, reshoring beneficiary
- Vertiv Holdings Co. (VRT) - Thermal products key to AI development
- Aspen Technologies Inc. (AZPN) - Positive grid software outlook
- GE Vernova Inc. (GEV) - Increasing demand for grid and power equipment
- Caterpillar Inc. (CAT) - Back-up generators
Within oil and gas:
- Invesco Energy Exploration & Production ETF (PXE) - Top rated oil exploration & production ETF
- VanEck Oil Services ETF (OIH) - Top rated oil services ETF
- WMB The Williams Cos Inc. (WMB) - Midstream key to backup renewable power
- Energy Transfer LP Common Units (ET) - Pipelines from Permian to data centers
- Kinder Morgan Inc. (KMI) - Pipelines from Permian to data centers
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