These companies are cashing in on booming AI power demand

Today’s issue in preview:

• These companies are cashing in on booming AI power demand

• The hottest AI trade in the world right now

• A bullish new development for the nuclear power super cycle

• Our hot hand continues: Engineering & Construction stocks reach new highs… the Agent Supernova trend drives communication stocks to new highs.

The hottest AI trade in the world right now

Credit: Sky-Blue Creative

Last night, the U.S. and Iran agreed to a two-week cease-fire, subject to the Islamic Republic reopening the Strait of Hormuz.

This paused a five-week conflict that constricted oil and gas flows and essentially held the stock market “hostage.” The price action of market averages and most individual stocks was not being driven by industry fundamentals, valuations, or interest rates… but by war news and the President’s social media posts.

It’s a delicate bargain that could go to hell in a hurry, but it’s a big step in the right direction. The U.S./Iran deal ensures the trends we track and trade will move on their own merits… rather than in big blobs that go up or down based on how the war is going.

In the short term, this deal is a negative for trades that worked well during the worst of the war. Over the past month, oil stocks, natural gas stocks, chemical stocks, and fertilizer stocks climbed due to the constriction of Middle Eastern resource flows. Those trades are reversing or at least pausing.

Then, there are the high-growth technology trends we’ve been covering consistently over the past year. AI infrastructure themes. Electric power consumption. Power Grid Upgrade. Space industry. These trends now can trade in an environment where their strong fundamentals – not Iran – can dictate price action.

For example, we’ve frequently highlighted the “relative strength” of optical networking stocks Lumentum (LITE), Coherent (COHR), and Ciena (CIEN) over the past month. Optical networking equipment is a critical ingredient of the AI infrastructure boom. It allows data to be transferred quickly and efficiently between parts of AI computing chains. Think of optical networking as a critical part of the “AI data traffic highway system.”

Thanks to big tech’s AI infrastructure spending boom, leading optical networking firms are reporting 25%+ annual growth rates and enjoying huge order backlogs.

This growth means optical networking stocks are among the world’s strongest trends. Today, Lumentum and Ciena both broke out to new all-time highs. It’s good to be on the receiving end of a multi-trillion-dollar investment boom.

These companies are cashing in on booming AI power demand

Credit: Yelantsevv

Optical networking stocks aren’t the only megatrend leaders hitting all-time highs in the wake of the U.S./Iran cease-fire. Regular readers won’t be surprised to learn that companies working to build and maintain America’s power grid are soaring to new highs as well.

On October 2, I detailed how big tech firms Google, Microsoft, Meta, OpenAI, and Amazon are making the biggest business “bet” in history. They are spending hundreds of billions of dollars per year on data centers, AI chips, and other infrastructure components. Their total investment in this space will exceed $600 billion this year and reach trillions more over the next five years.

All that AI infrastructure is poised to consume huge amounts of electricity. Goldman Sachs forecasts global data center power demand will climb 50% by 2027 and as much as 165% by the end of the decade.

This creates a big investment opportunity.

The U.S. power grid is often called the world’s largest machine. It’s a giant network of power stations, transmission lines, substations, and underground wires. Most people barely know it’s there or how it works, but without this big machine, your lights don’t turn on, there’s no Netflix, and your iPhone doesn’t charge.

Industry experts say the power grid is aging and creaking under the strain of increased electricity demand. The American Society of Civil Engineers (ASCE) gave the energy sector a D+ in its 2025 Infrastructure Report Card, citing concerns about rising energy demand, aging infrastructure, and a lack of transmission capacity.

Soaring electricity demand… a grid badly in need of an upgrade… AI supremacy on the line… trillion of dollars of economic output on the line…

This is a recipe for a bull market in companies that build, repair, and upgrade our power grid.

Last week, I highlighted how Power Grid Upgrade stocks were holding up well in a weak overall market. This “relative strength” was a bullish sign.

Today’s trading action is generating more bullish signs. Electric power plant turbine maker GE Vernova (GEV) reached a new all-time high today. Giant power grid contractor MYR Group (MYRG) reached a new all-time high. Electric grid equipment makers Powell Industries (POWL) and Monolithic Power Systems (MPWR) reached new all-time highs. The Power Grid Upgrade bull market is alive and well.

A bullish new development for the nuclear power supercycle

Credit: RelaxFoto.de

If the world’s strongest megatrends can resume trading on their own merits, then the nuclear power theme is poised to resume rewarding its investors. For evidence, we point to the new all-time highs reached by BWX Technologies (BWXT).

Above, we detailed AI’s soaring power demands and its corresponding bull market in Power Grid Upgrade stocks. Given these demands, AI companies and their electric power providers are making enormous investments to expand nuclear power capacity.

Nuclear can provide vast amounts of “always on, always there” carbon-free baseload power. Bloomberg reports that surging demand will drive $350 billion in nuclear spending in the U.S. by 2050.

With this in mind, back in December, I provided this list of stocks and funds as “picks to click” during the Nuclear Renaissance:

Investors should do well owning uranium miners (the fuel for nuclear) such as Cameco (CCJ). Companies that supply the nuclear power industry with vital equipment and services are also good bets, including firms such as BWX Technologies (BWXT, nuclear plant design/build), Mirion Technologies (MIR, radiation monitoring), and Centrus (LEU, uranium enrichment).

You can also take the “one click, and you’re done” route with NUKZ or the VanEck Uranium and Nuclear ETF (NLR). Both funds offer diversified baskets of companies in the nuclear power industry.

Today, the market confirmed the validity of our nuclear position by sending BWX Technologies up 5.9% to reach new all-time highs. The trend tailwinds are blowing for the Nuclear Renaissance.

Market Notes

• The AI infrastructure boom is using up huge amounts of computer memory equipment. Memory leaders Western Digital (WDC), Sandisk (SNDK), and Seagate (STX) soared to new all-time highs today.

• Our recommendation to own AI semiconductor leader Marvell Technology (MRVL) is paying off. The stock reached a new all-time high today.

• Our recommendation to own Engineering & Construction stocks continues to pay off. Industry leaders Argan (AGX) and MasTec (MTZ) reached new all-time highs today.

• The emerging Agent Supernova is poised to drive data and information traffic to new highs. The iShares U.S. Telecommunications ETF (IYZ) reached a new one-year high today.

• Our recommendation to be long the robotics megatrend continues to pay off. Semiconductor and robotics leader Teradyne (TER) reached a new all-time high today.

Regards,

Brian Hunt
Editor, Money & Megatrends

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