Will AI lead these traditional sectors to the next industrial revolution?
Unbelievably, AI is on fire, and the basic equipment and utilities sector of the US stock market is also booming. Data center equipment provider Vertiv's stock price has surged by 130% this year, even outpacing the growth of NVIDIA during the same period
After AI became popular, in addition to boosting the stock prices of various technology stocks in the US, it also revitalized traditional sectors such as public utilities and electricity.
The utilities sector in the S&P 500 index has outperformed the communication services and IT sectors, with a return rate of 15% in the past three months, shining brightly while the overall market only rose by 4.2% during the same period.
Lauren Goodwin, Chief Market Strategist at New York Life Investments, pointed out that data center construction and operators, as well as the electricity and utilities sectors, are the next wealth opportunities.
This can be attributed to companies like NVIDIA.
NVIDIA, as a leader in the AI trend, has seen its stock price double this year. NVIDIA CEO Jensen Huang stated last week that the next industrial revolution has already begun, with businesses and governments transforming existing data centers into "AI factories," bringing significant productivity improvements to almost every industry.
Companies like Microsoft and Meta have not only spent billions of dollars to purchase NVIDIA's GPUs but have also invested heavily in expanding and renovating a large number of data centers to ensure competitiveness in the field of AI.
This has also led to suppliers of infrastructure, electricity, raw materials, and other related industries skyrocketing in stock prices. For example, Vertiv, which provides power and cooling equipment for data centers, has seen its stock price more than double this year, comparable to NVIDIA, and its new orders in the first quarter increased by 60% year-on-year. As everyone rushes to build data centers, the demand for backup generators and cooling systems has sharply increased, leading to longer delivery times.
Additionally, Eaton, a manufacturer of power management equipment, has risen by 42% this year, while Johnson Controls, which manufactures commercial building electronic systems, has risen by 28%, outperforming the S&P 500 index during the same period. The once lackluster sectors of electricity, infrastructure, and utilities are now shining brightly under the influence of AI. Nadia Lovell, US stock strategist at UBS Global Wealth Management, said, "The sectors of stocks ignited by the flourishing development of artificial intelligence are increasing, with chips as the foundation but not the entirety."
As Huang predicted, AI is currently visibly impacting various industries at a rapid pace. In the future, when the productivity of all industries significantly improves, a new round of industrial revolution may be on the horizon