I spoke about this issue back in November already here: Here’s another reason why the AI trade might need a bit of rethinking
So, is 2026 going to be the year where that narrative takes over markets and we all have to redefine what it means to be in the AI trade?
Perhaps so. In reading the backdrop to the linked article above, it is clear that the real bottleneck and limitation to the development of AI isn’t coding or silicon. It’s all about electrical power and the physical capacity to access it.
In repeating the quote from Microsoft CEO, Satya Nadella:
“The biggest issue we’re now having is not a compute glut. It’s power. You may actually have a bunch of chips sitting in inventory that you can’t plug in – in fact, that is my problem today. It’s not a supply issue of chips. It is actually the fact that I don’t have warm shells to plug into.”
As everyone is chasing data centers now, the lead time and wait time to get all of that done has increased dramatically. Some of the wait time has even stretched out to five to seven years. And let’s be real, the tech companies involved don’t have that kind of time to wait and find out.
As such, some of them are pretty much forced to become their own utility providers. That is not to mention the likes of Nvidia also facing risks of supplying warehouse after warehouse full of chips that cannot be turned on because of capacity issues.
If the first half of the AI rally since 2023 was all about chips and faster, more intelligent programming, 2026 might be the year it all gets redefined to focus on the more bland stuff that is used to make and power these machines. It might just be the year of electrical transformers and the power grid.
And in focusing on that, firms like Vertiv, Schneider, Eaton, and perhaps even Siemens might steal more headlines in due time. If anything, keep an eye out on Schneider and Eaton as they have an edge in manufacturing their own circuit breakers.
As for Vertiv, the firm saw its share price hit a low of $53.60 earlier in the year but has risen by over 200% now to $166.25. Talk about a surge.
And amid all these names, let’s not forget to point to the potential surge in copper prices that could take place if this narrative takes hold. In a world that’s also involving electric vehicles, the AI industry now has to compete as well for the same raw materials in keeping up with the lightning speed progress.