As investors await Nvidia's (NVDA) long-awaited earnings report, Raymond James Managing Director Pavel Molchanov joins Market Domination Overtime to discuss how the utilities sector will emerge from the artificial intelligence race. Discuss how you are benefiting.
“If data centers are driving the overall growth in U.S. electricity demand for the first time in 20 years, that's a very good thing for utilities overall,” Molchanov explained. He expects growth of 2% to 3% annually as AI competition intensifies. The strategist also points to certain regions where data centers are growing, such as Virginia and Ohio, where electricity prices are more affordable.
He says investors looking to get into AI utilities should pay close attention to GE Vernova (GEV). This company does everything from power transmission networks to power software for power companies, and half of its revenue comes from ordinary income. ”
For more expert insights and the latest market trends, click here to watch the full episode of Market Domination Overtime.
This post was written by Melanie Leal
video transcript
Certainly investors will be waiting for video earnings after the closing bell, and the stock will likely rise based on that tomorrow.
When it comes to AI, the focus is on technology.
But we're talking about utilities, another kind of amazing field that will inevitably become AI.
As I pointed out earlier, this is the best performing sector this year.
Joining us this time is Raymond James, Managing Director, who focuses on renewable energy and clean technology. Thank you very much for attending.
appreciate.
Thank you for inviting me.
People are increasingly drawing the line between the power needed for things like data centers and the growth of AI and utilities, but first, the big picture: Is this the right conclusion for people to draw here? ?
So, after all, utilities are a regulated industry, but how much profit can you expect?
Do utilities regulate prices?
That's absolutely true.
On the other hand, electricity refers to the kilowatt-hours used by the economy, which ultimately depends on the economy.
This means that the first data center in 20 years will increase electricity demand across the United States.
That's a very good thing for any utility company.
So sales volume will increase even though the price is fixed by the state utility rate.
So Paul's plot is a traditional one, if you think about public works, you know, the one that moved into public works because they were hunkering down and hunkering down defensively. , you know, it was the same reason you go for essentials or health care.
But now, a lot of people are moving away, probably because they want to be exposed and exposed to the boom in interest in AI.
So should Pavel be considered both defensive and offensive?
Well, it's mainly defensive.
Let's be honest.
Well, you know, when we talk about the increasing demand for electricity in the United States, this is a big problem. Because we haven't seen electricity demand increase in any meaningful way in 20 years.
Well, that being said, the growth rate we're seeing is somewhere between 2 and 3% per year, right?
So we're not, we're not talking about double-digit 2-3%.
This is a big change from virtually no growth since 2007.
Um, but it's still, you know, not exactly the kind of growth in the technology sector.
And the story goes that the utility companies that do the best are likely those that are located in physical areas with many data centers.
Do you think that is how it is developing?
There are considerable regional differences here.
yes.
Virginia, data center towns around Washington DC, Ohio, another big place, Texas, not so much along the West Coast.
why?
That's because electricity prices are so high in California that the economics of data centers aren't as attractive.
This means they will primarily be installed in areas where electricity rates are low.
Californians pay 30 cents for electricity at the residential level, and the national average is half that.
In commercial or enterprise markets, things work a little differently.
But Paro, let's say you're a viewer and you're listening right now. We can see how these pricing structures vary from state to state.
You seem very curious.
You also want to be part of the broader grid modernization trend. He says one way to do that is Ge Ver Nova, but how did it get that name?
G Ver Nova does all things power grid, natural gas, nuclear, hydro, wind, and even all infrastructure.
That means software for power transmission networks, energy storage, and utilities.
This company does it all and half of its revenue is recurring.
Therefore, in addition to the equipment itself, you also need services
