Electrical Equipment Makers: The Unsung Heroes of AI Infrastructure

The recent surge in electrical equipment makers, including Powell Industries (POWL) and GE Vernova (GEV), can be attributed to the burgeoning AI infrastructure market. As reported on January 22, 2025, Oracle (ORCL), Softbank, and OpenAI have agreed to invest up to $500 billion in AI infrastructure in the U.S. over the next four years. This significant investment is expected to boost demand for electrical equipment required for data centers and other AI-related infrastructure (Source: Insider Monkey).



The increasing demand for AI infrastructure is leading to a surge in power consumption. Goldman Sachs predicted in May 2024 that data centers' power consumption will grow by 160% by 2030. This growth in power consumption requires more electricity, which in turn necessitates more power stations and electrical equipment. Consequently, the rally of electrical equipment makers today was likely spurred by the news about the upcoming, large investment in AI infrastructure (Source: Insider Monkey).

POWL and GEV are well-positioned to capitalize on this trend. POWL, a leading provider of custom-engineered equipment and systems, offers integrated power control room substations, medium-voltage circuit breakers, and other electrical equipment crucial for AI infrastructure. GEV, a unique industry leader enabling customers to accelerate the energy transition, provides products and services that generate, transfer, orchestrate, convert, and store electricity. Both companies are expected to benefit from the increased demand for electrical equipment driven by AI infrastructure investment.



However, it is essential to acknowledge the potential risks and challenges faced by electrical equipment makers. Supply chain disruptions, high initial investment costs, technological changes, regulatory and political risks, and intense competition are some of the primary challenges that POWL and GEV must navigate. To mitigate these risks, companies can diversify their supply chains, explore partnerships and collaborations, invest in R&D, maintain strong relationships with stakeholders, and focus on product differentiation and innovation.

In conclusion, the recent surge in electrical equipment makers like POWL and GEV can be attributed to the growing AI infrastructure market and the increasing demand for electrical equipment. As AI infrastructure investment continues to grow, these companies are well-positioned to capitalize on this trend. However, it is crucial for these companies to address the risks and challenges they face to ensure long-term success. Investors should closely monitor the developments in the AI infrastructure market and the performance of electrical equipment makers to identify potential opportunities.