The artificial intelligence investment frenzy has sent chip maker Nvidia Corp. higher by about 140 per cent so far this year. Electrical power utilities arose as an AI peripheral play resulting from the expected rapid expansion in AI-supporting data centers. The normally stodgy S&P 500 utilities index climbed 17.5 per cent between the end of February and May 21 this year despite bond yields climbing for the bulk of the period.
The cooling needs for data centers are extraordinary. In a June research report, Mr. Obin wrote “The next generation of AI chips run so hot that traditional air cooling is insufficient … An incremental one megawatt of electricity for IT loads would require about 285 tons of cooling, or similar to the requirements of a 115,000 square foot commercial building.”). Vertiv is almost a pure play on data centers, generating 75 per cent of its sales from related products and services.
Invesco chief global market strategist: This big rotation into value and small caps is only just beginning