Recently, I noticed a very interesting phenomenon: the explosion of AI and data centers is fundamentally changing the investment logic of the entire power industry. Previously, electric utility stocks were considered stable but boring choices, but now the situation has completely reversed.

Training a large AI model like GPT-4 consumes electricity equivalent to the annual power usage of thousands of households. Hundreds of millions of users worldwide are using ChatGPT, Midjourney daily, and the data centers behind them must operate 24/7, with staggering electricity consumption. Tech giants like Microsoft, Google, Meta, Amazon, and TSMC have all publicly announced significant increases in AI data center investments.

According to the International Energy Agency’s forecast, by 2030, global data center electricity consumption will more than double from now, reaching about 945 TWh, roughly equal to Japan’s total electricity consumption. AI is the main engine driving this rapid growth; data centers built specifically for AI are expected to see electricity use grow over four times.

This surge in demand is directly driving upgrades to power grids, new power plant construction, and energy storage deployment. Old power grids need to be upgraded and reinforced, with substations and transformer stations also being built. The core equipment required for these stations includes transformers, switches, and distribution panels. In plain terms, power concept stocks are about to get busy.

Taiwan’s four major heavy electrical equipment companies—like Hua Cheng, Chung-Hsin Electric, Shih Electric, and A-Li—originally benefited from Taiwan Power Company’s resilient grid plan and energy transition, with a market scale already worth hundreds of billions. Now, with AI creating a global new demand, especially from tech giants’ data center orders, the market expects the boom cycle of the heavy electrical industry to last longer and be more vigorous than previously anticipated. For example, Hua Cheng’s stock price has surged over 1,600% since 2023, exemplifying this trend.

However, honestly, the valuations of these heavy electrical concept stocks already reflect many expectations, with leading stocks generally trading at P/E ratios above 30 to 40 times, indicating a premium. If future profits do not grow as expected, stock prices could face correction pressure. Additionally, rising raw material costs, labor shortages, and supply chain delays could impact profit margins and shipment schedules.

But from a long-term perspective, grid upgrades, energy transition, and AI electricity demand are irreversible major trends. Taiwan Power’s resilient grid plan is expected to invest over 500 billion NT dollars over ten years, and the U.S. Inflation Reduction Act also provides substantial subsidies to promote grid modernization. These policy supports offer long-term, stable order streams for heavy electrical companies.

I personally believe this is not a short-term theme but a structural shift driven by global trends. If you are optimistic about this direction, you might consider phased entry or dollar-cost averaging—buying gradually during price dips to avoid chasing highs. Also, keep an eye on financial indicators like monthly revenue, gross profit margin, and operating profit margin to assess whether companies can convert revenue growth into real profits.

Besides Taiwan’s heavy electrical concept stocks, there are also many options in the U.S. market. Companies like NextEra Energy, Southern Company, and Duke Energy face global demand, with operations spanning worldwide grids and electrification sectors. Investing in U.S. stocks effectively diversifies assets across the global economy and can hedge against regional volatility. For more comprehensive system solutions, power equipment and infrastructure firms like Eaton, Quanta Services, and Hubbell are also worth watching.

In summary, whether in Taiwan or the U.S., power concept stocks are entering a long-term growth cycle driven by AI and energy transition. The key is to recognize this as a long-term trend and have enough patience to wait for the market to ferment.