The thesis
Data centers made electricity the scarce input for AI in 2024, and power stocks re-rated before many chip names did. On sales multiples, most of this group sits in the upper half of its own history. On earnings, several generators and Vertiv sit much lower, because profits grew faster than prices.
By Jake, founder of StockResearch.app · Oct 5, 2026 · Opinion, not investment advice
How the trade worked
Data centers need power that is available now and around the clock. Grid connections take years, large transformers have long lead times, and few new plants were under construction. That scarcity let generators sign long-term contracts at premium prices and gave equipment makers years of backlog.
Nuclear operators with plants already running gained the most. In September 2024 Constellation agreed a 20-year deal with Microsoft to restart Three Mile Island Unit 1 (Constellation). A month later Google signed for up to seven small reactors from Kairos Power (World Nuclear News).
Sales and earnings tell different stories
When we reviewed this page (October 5, 2026), most members sat in the upper half of their own five-year EV/Sales ranges, with Eaton, Quanta and nVent above the 90th percentile. On P/E the picture split: GE Vernova and Vertiv sat near the bottom of their own P/E ranges, and Constellation and Vistra in the bottom third, because earnings grew faster than share prices. Switch the chart to P/E to see today’s numbers.
A low P/E rank after a jump in earnings can also mean investors doubt those earnings will last. Power prices and contract terms reset, and equipment backlogs can shrink.
A compute race adds demand
On All-In #291, David Friedberg argued that AI-driven cyber attacks will force a defense race decided by compute, and that governments may ration data-center capacity by sector within 12 to 18 months (episode). If that happens, power still limits how much compute anyone can run. The AI Cyber Defense theme covers the security half of that argument.
What would change the view
- Large cloud companies cutting data-center spending plans.
- Equipment makers booking fewer orders than they ship.
- New long-term power contracts signed below 2024 and 2025 prices.
- Regulators limiting grid hookups for data centers, as when a larger Talen and Amazon deal was rejected in November 2024 (World Nuclear News).