A little-known segment of the stock market is gaining as much as 1,40% on the AI mania

• Artificial Intelligence mania will spark a boom in global power grids and power equipment companies, says JPMorgan Chase.

• So far this year, some stocks have risen 1,40%. The company says artificial intelligence will increase electricity demand tenfold by 2026.

• Demand for electricity is set to rise further as countries compete to reduce carbon emissions.

From microchips to cloud services, the investment boom around artificial intelligence has pushed many industries to a sky-high valuation.

But the trend isn't over yet. Artificial intelligence is also behind the boom in power grid and electrical equipment companies, some of which have seen their share prices rise by triple digits, JPMorgan said in a report Wednesday.

"Our analysts note that global grid/gas equipment manufacturers in the U.S., India, South Korea, and Europe have risen between 20% and 1,40% year-to-date, partly as a result of continued increases in new orders, as strong power consumption expectations and growing demand for power and equipment are fueled by the growing development of artificial intelligence and data centers," the analysts noted. "The analysts wrote.

JP Morgan estimates that AI could spur a tenfold increase in electricity demand by 2026, placing critical demands on a reliable grid and the equipment that runs it. Not only will the new technology require more data centers, but generative AI will triple its power demand from current norms.

Citing previously released research, JPMorgan Chase said it expects global grid capital expenditures to grow by more than 5% annually by the end of this century.

JPMorgan emphasized that the share prices of companies such as Taiwan's Fu Neng Electric and South Korea's Hyundai Electric have soared so far this year, up 1,421 TP3T and 1,211 TP3T, respectively. among the covered U.S. companies, Eaton Corp. has risen 351 TP3T so far this year.

In addition to AI, these companies should benefit from the global race to achieve net-zero emissions by 2050. To achieve carbon neutrality, an estimated $20 trillion in grid investment will be needed from 2022 to mid-century.

Investors interested in the sector should look for catalysts in Asia, such as new order guidance from Chinese companies and positive grid capital expenditure in China in the third quarter.

"The global underinvestment in grid capital expenditure over the past decade is likely to generate strong demand for grid equipment, presenting opportunities for Chinese exporters with technological and cost advantages and low geopolitical risk," the bank's analysts noted.

J.P. Morgan highlights SiYuan Electric, Hua Ming Equipment and Wo Hing Electric.

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