Powering the AI Era

By Presidio Wealth Partners on July 25, 2025

For more than two years, we’ve been talking about the electrification theme, and today, we hold many positions in our portfolios that reflect meaningful exposure to companies poised to benefit. This piece offers a deeper exploration of the topic and reiterates our long-term bullish view.

The Aging Power Grid

Electricity demand generated by artificial intelligence (AI) is rapidly outpacing the capacity for existing power grids. Currently, over 70% of the grid is more than 25 years old. This aging system is under increasing pressure from growing data center usage, electrification, and expansion of energy sources. Future electricity demand is projected to grow significantly, and the National Electrical Manufacturers Association (NEMA) reports that over the next 15 years, the amount of storage connected to the U.S. electricity grid will grow by 1,100%.[1]

AI development requires large-scale data center buildouts to support the hardware that’s needed for processing. These facilities can demand hundreds of megawatts of power each, with some exceeding a gigawatt – enough to power a small city or even a small state. Currently, data centers consume 4.4% of U.S. power supply, with estimates that this could grow to 9% by 2030[2]. This increased demand is putting a strain on power grids, raising the necessity to a power grid update.

Industrial companies are at the forefront of this power and grid expansion; the higher consumption can translate to increased revenue and higher earnings. Furthermore, the demand for electricity derives from demand for data centers, which necessitates significant investment in infrastructure upgrades. For companies involved in traditional power generation, grid expansion and renewal, and electrical infrastructure upgrades, the outlook is compelling.

Electrification remains a key investment theme across our portfolios. We continue to maintain exposure to select leaders in the U.S. electrical, automation, and broader industrial sectors, reflecting our long-term conviction in these areas.

Chart 1: U.S. Electricity Consumption Index[3]

The Bellwether for Industrial Automation

Recently, we saw very strong earnings from ABB Group (ABBNY). Their recent Q2 2025 results revealed a record $9.8 billion in order intake, a 16% y/y jump. This further underscored the structural shift in demand for industrial automation and electrification solutions. The recent surge for ABB is driven by the global expansion of data center infrastructure, along with a broader push to automate manufacturing and energy systems.

This is notable because ABB is viewed as an important bellwether for U.S. electrical, automation, and industrial stocks. The strong order growth and margin expansion are a good read on other electrical companies that we believe are ripe to grow.

These results are bolstering confidence in industrial and electrical automation, brushing off any concerns about sluggish global growth and ongoing trade tensions. This momentum suggests that businesses are still eager to invest in next-generation infrastructure and are striving to boost productivity. These results are indicative of robust demand for industrial and electrical expansion, again, a theme we have been
focused on for quite some time.

The Electrical Beneficiaries

The global power landscape is undergoing a profound transformation, driven by AI innovation and surging electricity demand from data centers, manufacturing, and electrification. This shift is creating long-term opportunities across the infrastructure and power management ecosystem.

Two companies very involved in this transition are Quanta Services (PWR) and Eaton Corporation (ETN) . Both play critical roles in enabling the modernization of energy systems and supporting the buildout of next-generation infrastructure[4].

Quanta Services is one of North America’s largest specialized infrastructure contractors, with a strong presence in grid modernization and renewable energy integration. As of Q1 2025, the company reported a record backlog of $35.3 billion, reflecting robust demand across transmission, solar, and data center projects. Its recent acquisition of Cupertino Electric signals a strategic move into the growing data center infrastructure space.

Eaton Corporation is a major provider of power management technologies, serving utility, industrial, and commercial markets. In 2024, its data center segment grew by 45%, outpacing broader electrical demand. In Q1 2025, Eaton reported $3.01 billion in net sales, up 11% year-over-year, with nearly half of that coming from its Electrical Americas segment. Its “Data Center as a Grid” approach exemplifies how companies are innovating to meet rising energy demands while enabling grid flexibility.

The Electricity Outlook

After decades of relatively stable electricity demand, the U.S. is now experiencing a surge in power consumption, driven by artificial intelligence. By 2030, power demand is expected to increase around 17% from 2024 levels.

To meet the expected increase in demand, the electric power sector is experiencing unprecedented growth in capital investment. In 2024, the power sector’s capital investment reached an all-time high of $179 billion, with continued growth projected in the years ahead. In this increasingly complex environment, electric companies are helping to forge the path to a more reliable, resilient, and affordable electric grid to support sustained demand growth.

Chart 2: U.S. Electric and Multi-Utility Capex[5]

[1] Source: Utility Dive, As of April 2025.

[2] Source: EESI, As of April 2025.

[3] Source: Utility Dive, As of April 2025.

[4] Source: Global X, As of March 2025.

[5] Source: Deloitte, As of February 2025.