Zhitong Finance and Economics APP learned that there are signs that stock investors are worried about the soaring stock prices of artificial intelligence (AI) industry leaders, and they are beginning to pay attention to some less prominent technology boom beneficiaries.

Since ChatGPT was released at the end of 2022, the stock price of nvidia (NVDA.US) has skyrocketed seven-fold, helping to propel the global rebound dominated by large-cap stocks. However, concerns about the sustainability of the rise, as well as geopolitical tensions and changes in global monetary policy, are pushing investors to look for new drivers.

Investors are selling shares of artificial intelligence giants and turning to small-cap and defensive stocks that are performing poorly. This rotation coincides with the expansion of the artificial intelligence theme beyond chips and software into areas such as electrical utilities and land.

Gina Martin Adams, chief equity strategist at Bloomberg Intelligence, recently said, "From a speculative point of view, we see some trades related to artificial intelligence outside of the technology and communications fields," but these two areas still dominate. The public utilities industry "had a more optimistic mood in the second quarter as people believed that artificial intelligence would attract more investment and ultimately lead to stronger growth."

Although technology and communications are still the best-performing sectors in the MSCI global index this year, with gains of more than 14%, they are the worst-performing sectors so far this quarter. Since the end of June, the two sectors with the largest gains are real estate and utilities.

The following are outlooks for various related industries:

Power Supply

The surge in demand for electricity from the technology industry has led to a shortage of electricity supply in many parts of the world. The International Energy Agency estimates that by 2026, the electricity consumption of data centers, artificial intelligence, and cryptos may double to more than 1,000 TWh, roughly equivalent to Japan's electricity consumption.

This has prompted people to look at public utilities companies around the world, from Dominion Resources (D.US) and Southern Company (SO.US) in the United States, to YTL Power International Bhd and Gulf Energy Development PCL in Southeast Asia.

According to Evgenia Molotova, a senior investment manager at Pictet Asset Management, "We believe that the widespread application of artificial intelligence may change the rules of the power generation industry. Depending on adoption rates, the data center construction scale required for artificial intelligence may be two to three times the current scale by 2030."

Equipment

Ken Liu, an utilities analyst at UBS Group China, said that transformers, equipment that helps to transport electricity from generators to users, are in serious short supply, and if you order one today, you could be lucky to receive it by 2028.

This has boosted the stock prices of large transformer manufacturers this year, including GE Aerospace (GE.US), French Schneider Electric, and Japanese Hitachi Ltd Sponsored ADR.

"Energy infrastructure will be a very big theme that existed before the advent of artificial intelligence, and artificial intelligence will only increase the demand for energy consumption," said Philipp Baertschi, chief investment officer of Bank J. Safra Sarasin AG. " There will be very good opportunities. But people need to know that these opportunities are highly cyclical and highly volatile."

Renewable Energy

The sharp increase in electricity consumption has also raised concerns about increased pollution, prompting people to pay attention to renewable energy stocks. Companies involved in solar, hydro, wind, and nuclear energy are all seen as potential beneficiaries.

Chris Liu, senior portfolio manager at Invesco, noted that China is at the forefront in the proportion of new alternative energy sources added by the State Grid each year. China's solar cell production accounts for 90% of global production, and China's hydropower stocks such as China Yangtze Power (600900.SH) and Sichuan Chuantou Energy (600674.SH) could be of interest to investors despite the potential for European and American tariffs in the industry.

From the perspective of artificial intelligence, alternative energy stocks in other regions are also highly focused, including Dutch wind turbine manufacturer Vestas Wind Systems A/S and South Korean hydrogen-related company Doosan Fuel Cell.

Copper

Even commodities are related to AI trading. Copper is a key material for cables and heat exchangers that help cool data centers. Related stocks include Freeport-McMoRan (FCX.US), BHP Group Ltd. (BHP.US), and Jiangxi Copper (600362.SH).

Bloomberg Intelligence analyst Grant Sporre said, "By 2030, global copper consumption could increase by 2 million tons, with more than half coming from the United States, as power-hungry AI drives the growth of data center capacity."

Data centers

Data centers utilize demand for land, which is used to host computing facilities near power sources and major AI clients. Leading real estate investment trusts focused on this area include Equinix Inc. (EQIX.US), Digital Realty Trust Inc. (DLR.US), and Singapore's Keppel DC REIT. Due to the drive of artificial intelligence, the stock price of Australian real estate company Goodman Group has risen by about 35% this year.

Southeast Asia is seen as an emerging AI hotspot, with local telecoms such as Malaysia's Telekom and Thailand's Advanced Info Service PCL viewing data centers as a new growth engine. Philippine telecom company PLDT Inc. is seeking a valuation of over $1 billion for its data center investment portfolio, as it considers a partial sale or listing on a real estate investment trusts (REITs).

End-users

Some market strategists are focusing on companies that are expected to benefit from improving businesses through artificial intelligence and profit from it.

Morgan Stanley estimates that shares of these "adopters" will average up 27% this year as the resulting productivity gains help boost performance. Morgan Stanley believes that industry is one of the biggest beneficiaries.

Morgan Stanley Global Research Director Katy Huberty said, "If you look at the largest market cap companies, you'll find companies like Deere (DE.US) that are using information from agricultural equipment to optimize agriculture." She also highlighted Paccar Inc. (PCAR.US), which designs and manufactures large commercial trucks.

The ability of artificial intelligence to efficiently analyze large and complex data sets is also seen as a boon to the healthcare industry, especially in accelerating the drug development process. KeyBanc Capital Markets healthcare technology analyst Scott Schoenhaus recommends that investors hold small biotech stocks including Recursion Pharmaceuticals (RXRX.US) and Schrodinger (SDGR.US).