Profits from $VIE (+0,64%) and $RWE (+0,92%) (bought 5 weeks ago both up over 10%) to increase cash reserve for purchases 🎉🥳🍾

1. energy consumption of data centers and the role of RWE

One user shared a detailed analysis on the increasing energy demand of data centers, especially due to Artificial Intelligence (AI) applications. He emphasized that companies like RWE could benefit from this growing energy demand, as they play a key role in supplying this infrastructure as an energy provider. The article highlights that RWE is well positioned to benefit from this trend by providing power to data centers and investing in renewable energy.

2nd target price adjustment by Berenberg

According to an article on Getquin, Bank Berenberg has lowered its target price for RWE from €46.50 to €42, but maintains its Buy recommendation. This adjustment could be due to current market conditions or company-specific factors.

3 RWE's exposure to CO₂ utilization

In a discussion on carbon capture and utilization (CCU), RWE is mentioned as one of the companies that filters and compresses gases with CO₂ from the air and makes them usable for industrial purposes. This commitment underlines RWE's efforts to integrate more sustainable practices into its business models.

4. expected dividend increase

Another article points out that RWE is one of the companies expected to increase its dividend. This expectation could be interesting for investors looking for stable and growing dividend yields.

🔥In summary, the discussion on Getquin shows that RWE is active in various areas, from adapting to increasing energy demand through technological developments to implementing sustainable practices and the prospect of financial benefits for investors.

$RWE (+0,92%)
$EOAN (+0,1%)
$JPM (+0,12%)
#energy
#energie
#strom

Yesterday, RWE also held its analysis conference ($RWE (+0,92%)) to present the results for the 2024 financial year.

Markus Krebber (CEO) and Michael Müller (CFO) gave a detailed insight into the developments and then answered the analysts' questions. Here is my summary of the key points:

Markus Krebber began with a positive review of 2024. Despite a decline in European commodity prices at the at the beginning of the year, RWE was able to keep its promises. The robust business portfolio enabled a strong operating and financial performance. As a sign of adaptability and capital allocation to shareholders, a share buyback program with a volume of EUR 1.5 billion was launched in the fourth quarter of last year. share buy-back program with a volume of EUR 1.5 billion was initiated.

Although the market for the demand for electricity are promising and significant investments in additional electricity generation capacity are capacity is required in all core markets, there is a higher uncertainty in the investment environment. RWE will therefore be more cautious when making additional more cautious commitments. The company is aiming for a conservative leverage ratio to ensure a strong balance sheet in volatile times. The internal requirements have been increased across all technologies and markets increasedand stricter investment stricter investment criteriacriteria, particularly in the USA.

This will lead to a significant reduction in the investment program by 2030. For the years 2025 to 2030, the planned investments were reduced by 25 % or EUR 10 billion compared to the capital market day 2023. Part of this optimization is an active sell-down and partnering strategy for the offshore portfolioto reduce the burden of tied-up capital during the construction phase. Nevertheless, projects with a total capacity of total capacity of 12.5 gigawatts under constructionwhich net committed investments of currently EUR 13 billion. at present.

These projects are expected to attractive returns deliver attractive returns. While the planned investments for 2025 are fully committed, there will be a high degree of flexibility in capital flexibility in the allocation of capital. The financial targets have been confirmedA EPS growth (CAGR) of 18 % from 2025 to 2027which is EUR 3 per share as well as the long-term target of EUR 4 adjusted earnings per share in 2030. The increased dividend for 2024 was confirmedand a a further increase of EUR 0.10 to EUR 1.20 per share for 2025 is targeted. The current share buyback program of EUR 1.5 billion will run until the second quarter of 2026.

Looking back on 2024, Krebber emphasized the strong financial and operational performance which is based on the robustness of the integrated generation portfolio was based. The adjusted EBITDA amounted to EUR 5.7 billion and exceeded the middle of the forecast range. The adjusted earnings per share amounted to EUR 3.1 and was also well above the middle of the forecast range. At the same time progress was made with decarbonization was achieved. The CO2 emissions fell by a further 13% in 2024 compared to the previous year. Over the course of the last twelve months six lignite-fired power plants with a total capacity of 2.4 gigawatts were decommissionedand the Dutch Amer power plant Amer power plant was converted to 100% biomass. The Science Based Targets Initiative (SBTi) confirmedthat RWE's climate targets for reducing emissions are compatible with the 1.5-degree pathway. path.

The updated capital allocation plans up to 2030 take into account the latest market developments. On the one hand, the power sector in Europe and the USA shows strong fundamentals. The demand for electricity is expected to increase significantlydriven by the general electrification and the need additional data centers to support the artificial intelligence. Power generation from renewable energies in combination with batteries and gas back-up should ensure the necessary additional supply. Significant investments are required in renewable energies, batteries and gas-fired power plants in all core markets. On the other hand, these massive investments require a stable and reliable investment framework which is currently associated with higher uncertainties is currently fraught with uncertainty. Questions about energy policy in the USA and geopolitical tensions have a potential impact on international trade. RWE is responding to this environment with a more cautious approach, higher return targets and stricter investment criteriaespecially in the USA.

The active portfolio management of the offshore wind business is part of the optimized capital allocation. The aim is to reduce the reduce the burden of tied-up capital for projects under construction. RWE pursues a systematic approach and reviews projects in all three phases (development, construction, operation) in terms of risk and capital intensity in order to determine the optimum time and scope for farm-downs. farm-downs for farm-downs.

Many important topics were covered in the subsequent Q&A session:

Peter Bisztyga (Bank of America) asked about the potential share of RWE in the planned 20 gigawatt CCGT power plants in Germanythe associated capital expenditurethe speed of implementation and the necessary framework conditions from the government. Markus Krebber believes that RWE is in a very good position to benefit from this project, particularly due to the advanced planning, good locations and preliminary contracts with suppliers. In view of a current market share of 20%, this could be an indicator of the potential. However, investments would only be made with very attractive returns, which are expected due to less competition. With regard to data centers Krebber sees three possibilities: Sale of significant PPA volumes, Sale of space no longer required and utilization of the existing infrastructure through long-term leasespossibly with 24/7 power supply and green PPAs. Further announcements in all three areas could follow this year.

Alberto Gandolfi (Goldman Sachs) addressed the EPS target for 2027 and noted that the current guidance no longer includes gains from asset rotations which were estimated at around EUR 300m (EUR 0.30 EPS) at the previous Capital Markets Day. He asked about the drivers for the 10% upgrade without these gains. Michael Müller confirmed the assumption regarding the asset rotations. Markus Krebber added that the higher return expectations and the flexibility between investments and share buybacks play a role here. Gandolfi also asked about the prioritization of share buybacks over investment opportunities such as the German infrastructure plan and whether there is a certain share price price at which share buybacks are preferred. Krebber emphasized that RWE aims for higher returns on new investments and will return capital to shareholders if these returns are not achieved. There is no specific share price formula, but the share price is part of the considerations. In the current market environment, a further share buyback would be more likely to be considered from 2026 if there is flexibility.

Deepa Venkateswaran (Bernstein) asked about the confidence in achieving the EPS target of EUR 4 for 2030despite capital expenditure being EUR 8.5bn lower than previously announced. Michael Müller explained that higher return expectationsthe balance between investments and share buybacks and potential adjustments to the cost structure are the decisive factors here.

Ahmed Farman (Jefferies) asked for a breakdown of the EUR 10bn CapEx reduction by gross reduction by gross reduction and farm-downs/disposals as well as an estimate of the expected proceeds from farm-downs/sales until 2027. Markus Krebber named the following areas with lower investments US offshore (no further planned), Hydrogen (significantly reduced) and US onshore (no more for the time being). The lower net offshore investments are partly due to farm-downs, but also to the reluctance to take on more merchant risk in the current situation.

Olly Jeffery (Deutsche Bank) asked whether RWE would also no further US onshore investments beyond 2025/26 and taking into account potential German gas-fired power plant investments and AR7 investments sufficient balance sheet capacity for further share buybacks in the order of magnitude of the current program. Markus Krebber referred to the Norfolk projectwhere a farm-down is being sought to limit net capital expenditure. The decision on capital allocation from 2026 onwards, including further share buybacks, will be made later in the year or early next year, taking into account return expectations and the share price.

Harry Wyburd (BNB Paribas Exane) asked about the current developments in the installation costs for renewable energies (onshore and offshore wind) and whether falling costs could improve the chances of success of future auctions. Markus Krebber currently sees a plateauing in costs and even expects the slowdown in the expansion of US offshore wind to ease the supply chain. easing in the supply chain. In his opinion, however, this will not automatically lead to a greater willingness on the part of developers to take on more merchant risk. He pleads for adapted subsidy modelssuch as inflation-adjusted bilateral CfDs with longer maturities to enable investment while reducing costs for consumers. Wyburd also asked about the risks in the supply chain for new gas-fired power plants. Krebber confirmed that the delivery times for gas turbines are currently long (approx. 2028)but that RWE can protect itself through reserved production slots for the planned projects. He indicated that this gives RWE a competitive advantage could give RWE a competitive advantage.

Rob Pulleyn (Morgan Stanley) missed the mention of Amprion and asked about the the status of the sales process for the 25.1 % stake and and whether the potential proceeds had already been taken into account in today's planning. Markus Krebber confirmed that options for Amprion are being examinedto solve the high capital requirements there, as RWE does not wish to invest further in the TSO business. A partial or full sale is possible and the potential proceeds are not yet included in the net not yet included in the net capital expenditure presented.

Piotr Dzieciolowski (Citi) asked about the implications of the higher yield requirements for the long-term targets and whether the lower CapEx requirement will have an impact on operating expenses (e.g. development costs). Michael Müller confirmed that this was all taken into account in the figures and that fewer investment opportunities would also have an impact on the cost structure.

Conclusion:

In the 2024 financial year, RWE achieved a strong operating and financial performance and exceeded expectations. For the future, however, the company is more cautiousinvestments, in response to the increased uncertainty in the global market and energy policy risks, particularly in the USA. The reduction of the investment program and the focus on higher returns indicate a more disciplined allocation of capital. At the same time, the company is underlining its commitment to attractive shareholder returns through the ongoing share buyback program and the goal of continuous dividend growth.

The offshore wind division continues to develop positively and RWE is focusing on farm-down partnershipsto conserve capital. Battery storage remain an important growth area. Overall, the conference gives the impression of a company that is leveraging its strengths, but at the same time is aware of the current challenges and reacts flexibly to them.

$RWE (+0,92%) Let's see what time brings 😏

At 53 billion euros, the 40 DAX companies are likely to pay out almost one billion euros more this year than a year ago - more than ever before.

The reason for the strong development is high consolidated profits and unexpectedly rising dividends at a good dozen companies, including $ALV (-0,01%) Allianz, $MUV2 (-0,48%) Munich Re and $RHM (+0,97%) Rheinmetall.

At 109 billion euros net profit, the DAX companies are likely to have earned as much in 2024 as in the previous year, according to Handelsblatt calculations. Slump in earnings for the three car manufacturers $BMW (-0,32%) BMW, $MBG (-0,34%) Mercedes and $VOW (+2,19%) VW will be offset by companies in other sectors, in particular the major insurers Allianz, Munich Re and $HNR1 (+0,04%) Hannover Re, but also $DTE (-1,56%) Deutsche Telekom, $HEN (+0,36%) Henkel and $EOAN (+0,1%) Eon.

More than a dozen DAX companies have announced higher dividends than the market had previously expected. For example $ALV (-0,01%) 15.40 euros per share after 13.80 euros in the previous year. Analysts had forecast just under 15 euros. The insurer is thus distributing just under six billion euros. This is a record in the German corporate landscape.

The biggest jump is at $MUV2 (-0,48%) Munich Re: The reinsurer is increasing its dividend by five euros per share to 20 euros.

The two healthcare specialists $FRE (+0,99%) Fresenius and $FME (+1,73%) Fresenius Medical Care, the brand manufacturer $HEN (+0,36%) Henkel, the automotive supplier $BTR Continental, the $CBK (-1,98%) Commerzbank, $RHM (+0,97%) Rheinmetall and $HNR1 (+0,04%) Hannover Re have raised their dividends, in some cases significantly more than expected. This is also due to rising profits, which justify a higher profit share for shareholders.

The largest dividend payers in the DAX are

• $ALV (-0,01%)
• 
  $DTE (-1,56%)
• 
  $MBG (-0,34%)
• 
  $SIE (+2,75%)
• 
  $VOW (+2,19%)

Like the car manufacturers, a number of companies in the DAX remain below the usual international payout ratios, including the family-run groups $BEI (+0,83%) Beiersdorf and $MRK (-0,31%) Merck. They pass on less than 30 percent of their profits. This leaves enough of a buffer so that dividends do not have to be reduced immediately in more difficult times.

Germany's most valuable group, $SAP (-0,94%) SAP, with a payout ratio of 85%, is pushing the limit: net profit of 3.1 billion euros in the past year compares with a total dividend payout of 2.7 billion euros. However, the profit was burdened by a one-off effect.

So far, a total of 20 companies have increased their dividends, with only $BAS (+0,81%) BASF and the three car manufacturers. Four companies have yet to do so: $RWE (+0,92%) RWE, $SY1 (+1,28%) Symrise and $VNA (+2,12%) Vonovia are likely to increase their dividends, while analysts expect $PAH3 (-0,7%) analysts expect a reduction at Porsche Holding.

Source (excerpt) & chart: Handelsblatt, 15.03.25

Bitcoin's strength fizzles out in 24 hours + Many US stocks hit annual lows + Tesla's sales in Scandinavia slump + Okta exceeds expectations + JPMorgan puts RWE on 'Positive Catalyst Watch'

Bitcoin $BTC (+0,76%)strength completely sold off again

• Bitcoin is losing value again after a strong rise on Sunday and is trading at almost 86,000 US dollars on Bitstamp.
• Market analyst Timo Emden from Emden Research describes the price rise as a "flash in the pan", as the initial euphoria following Trump's comments on cryptocurrencies has given way to a more sober view.

Many US equities at annual lows

• Microsoft Corp. $MSFT (+2,08%)falls to a new low for the year, currently down -2.62% to $386.57. The year-to-date performance is -8.30 %.
• T. Rowe Price Group Inc. $TROW (+2,56%)falls to a new low for the year, currently -1.97 % at $103.62. The year-to-date performance is -8.41 %.
• Occidental Petroleum Corp. $OXY (+0,57%)falls to a new low for the year, currently -5.98 % to $ 45.92. The year-to-date performance is -7.04 %.
• Target Corp. $TGT (+2,65%)reaches new 52-week low, currently -3.26 % at $120.19.
• Copart Inc. $CPRT (+0%)falls to a new low for the year, currently -0.64 % to $ 54.42. The year-to-date performance is -5.04 %.

Tesla's $TSLA (+2,01%)sales in Scandinavia collapse

• Tesla's sales in Scandinavia recorded a significant decline in February compared to the same period last year.
• The electric car manufacturer's market share is shrinking, while customer brand loyalty is being severely tested by CEO Elon Musk's political involvement in the Trump administration.
• In recent years, Tesla's vehicles have dominated the sales charts in Norway, Sweden and Denmark.
• But the tide has turned in 2024: According to the latest registration data from Monday, Tesla (NASDAQ:TSLA) is now falling behind competitors such as Volkswagen and Toyota, which are scoring points with new models.
• The figures speak for themselves: in Sweden, only 613 new Tesla vehicles were registered in February - a drop of 42% compared to the previous year.
• The situation is even more drastic in Norway and Denmark, where registrations fell by 48% to 917 and 509 vehicles respectively.
• This trend is particularly notable as the general demand for cars, especially electric vehicles, continues to grow in these countries.

Okta $OKTA (+1,16%)exceeds expectations

• Okta Inc. fourth quarter earnings per share of $0.78 beat analyst estimates of $0.74.
• Revenue of USD 682 million exceeds expectations of USD 668.91 million.

JPMorgan places RWE $RWE (+0,92%)on 'Positive Catalyst Watch'

• The US bank JPMorgan has placed RWE shares on its "Positive Catalyst Watch".
• According to analyst Javier Garrido's commentary published on Tuesday, he expects the Essen-based company to provide encouraging news on the use of capital with the publication of its annual results.
• He sees scope for further investment cuts of EUR 3 to 5 billion, which could open the door to further share buybacks in the future.
• Garrido's fundamental rating remains "Overweight" with a price target of 47.50 euros.

Tuesday: Stock market dates, economic data, quarterly figures

• Quarterly figures / company dates USA / Asia
• 18:00 Warner Music AGM
• No time specified: Target | Best Buy quarterly figures

• Quarterly figures / Company dates Europe
• 06:45 Kuehne & Nagel Annual results
• 07:00 Bilfinger | Lindt & Sprüngli Annual results
• 07:30 Continental | Fielmann Annual results
• 09:00 Continental BI-PK
• 10:00 Bilfinger BI-PK
• 12:30 Continental Analyst Conference
• 18:00 Freenet preliminary annual results
• Without time information: Bawag Group | VAT | Thales | Prada Annual figures

• Economic data

00:30 JP: Unemployment rate 1/25

00:50 JP: Investment Q4/24

11:00 EU: Labor market data January Eurozone Unemployment rate FORECAST: 6.3% previously: 6.3%

12:30 UK: Chancellor of the Exchequer Reeves, hearing in the House of Commons

15:00 EU: ECB, APP/PEPP monthly report

No time given:

CN: National People's Congress of China, press conference

US: Import tariffs on goods from China, Canada and Mexico come into force

US: Fed Richmond President Barkin, speech at Fredericksburg Regional Alliance event

So I've had a look around and picked out a few interesting stocks where I see a lot of potential. I would like to hear your opinion. I am not planning any long-term positions, but rather trading for a maximum of 6 months. I have decided on $RWE (+0,92%) with HD4M7A entry price of 1.73 $GBF (-0,07%) with SX04B8 entry of 0.35 $JGHHF with HD9ARC entry today for 1.40 $DUE (+1,42%) with HD90XX entry 1.25 $KTN (-0,68%) with SX04FN entry 0.21 I think that these stocks will perform well over the next few months if the tech stocks correct sharply, as I expect.

Graphic: AI generated

The rapid development of AI has triggered a veritable boom in data centers. Companies such as OpenAI and DeepSeek are driving this revolution and the demand for high-performance servers is growing exponentially.

However, the increase in computing power is also accompanied by massive energy consumption, an issue that is leading to global discussions about infrastructure, efficiency and future investments [1].

At the same time, the question arises as to whether there is currently an overinvestment in computing power. The Chinese AI company DeepSeek, for example, has presented a model that works more efficiently than previous large language models (LLMs).

Does this mean that we will soon need less computing power?

Or will the Jevons paradox occur instead, i.e. the effect that more efficient technologies actually increase overall consumption in the long term? [2, 3]

In this article, I will focus on the key developments in the data center sector, the growing demand for energy, regional characteristics, current challenges and potential investment opportunities.

As always, the article is intended to shed light on the background to current events, provide food for thought and give impetus. The stocks mentioned do not, of course, constitute investment advice.

🤖 Data centers: the foundation of the AI revolution

The growing global demand for AI-supported software and digital applications requires powerful data centers. Goldman Sachs analysts forecast that the global demand for power from data centers will increase by 50% by 2027 and by up to 165 % could increase [1].

This chart below forecasts the energy consumption of data centers (in terawatt hours) by 2030, distinguishing between AI- and non-AI-based applications in the US and the rest of the world. Total consumption is expected to rise to over 1,000 TWh by 2030 [4].

Our analysts expect data center power consumption to increase by more than 160% by 2030

Source: [4], primary: Masanet et al. (2020), Cisco, IEA, Goldman Sachs Research

This data shows how AI applications will massively increase energy consumption. The rapid increase in the area of "US AI" and "Rest of world AI" is particularly striking.

The three main reasons for this increase are

• Larger AI models:

New models such as GPT-5 or DeepSeek AI require more and more computing power. Training and operating these models requires trillions of calculations [1].

• Real-time AI applications:

Companies are integrating AI into numerous applications: from search engines to personalized financial and healthcare services.

• Cloud computing & data storage:

As digitalization progresses, the global demand for data storage and cloud services is increasing [1].

Which companies dominate the market?

On the demand side for data centers, large hyperscale cloud providers and other companies are building large language models (LLMs) that are capable of processing and understanding natural language. These models need to be trained on huge amounts of information using power-intensive processors [4].

On the supply side, hyperscale cloud companies, data center operators and asset managers are deploying large amounts of capital to build new high-capacity data centers.

These include, among others:

• Microsoft $MSFT (+2,08%) : Operator of Azure Cloud and partner of OpenAI
• Alphabet $GOOGL (+5,72%) : With Google Cloud and DeepMind
• Amazon $AMZN (+3,74%) : AWS, the world's leading cloud provider
• Meta $META (+3,74%) : Develops its own AI chips and continues to expand its infrastructure

In addition, specialized data center providers such as Equinix $EQIX (+0,31%) and Digital Realty $DLR (+2,31%) as they supply physical infrastructure to the hyperscalers [6].

According to Goldman Sachs Research, demand for data center infrastructure will increasingly outstrip supply in the coming years.

The utilization rate of existing data centers is expected to rise from around 85% in 2023 to more than 95% by the end of 2026. However, the situation is expected to ease from 2027 onwards as new data centers are commissioned and demand growth driven by AI slows down (see chart below) [1].

Goldman Sachs currently estimates that the global power consumption of the data center market is around 55 gigawatts (GW). This is made up of cloud computing workloads (54%), traditional workloads such as email or data storage (32%) and AI (14%) [1].

For the future, analysts predict that electricity demand will increase to 84 GW by 2027. The share of AI is expected to grow to 27%, while the cloud share will fall to 50% and traditional workloads to 23% [1].

By the end of 2030, around 122 gigawatts (GW) of data center capacity will be online.

At this point, I asked myself as a layman how the units mentioned so far are to be understood, in my first graphic I speak of 1,000 TWh of energy consumption of all data centers by 2030 and now here is talk of 122 GW of data center capacity? In order not to go completely beyond the scope of the article, I have added a section at the very end in case some of you also feel like a layman and want to put the "units" into perspective.

... and now on with the article...

One central problem remains:
Where does all the energy come from?

⚡️Energieversorgung: Can the grid keep up?

According to estimates by Goldman Sachs, more than 720 billion US dollars will have to be invested in expanding the power grid worldwide by 2030 in order to supply the new data centers with sufficient energy [1].

Europe in particular, where electricity consumption was expected to decline for many years, is experiencing a veritable "demand shock" [1].

Which energy sources supply data centers?

• Natural gas & battery storage:

Natural gas is seen as a realistic short-term solution to meet continuous demand. It serves as a bridging technology until renewable energy and storage solutions are further developed, as renewable energy is not available around the clock [4].

• Renewable energies:

Wind and solar energy could cover around 80 % of demand in the long term, provided that sufficient storage solutions are integrated [4].

In practice, solar plants run on average only about 6 hours per day, while wind power plants run on average 9 hours per day. There is also a daily volatility in the capacity of these sources, depending on the radiation of the sun and the strength of the wind [4].

The graph shows the fluctuations in capacity factors for wind and solar energy in the USA in 2023. The capacity factor indicates how efficiently an energy source utilizes its maximum output throughout the year.

• Wind energy (light blue line): The highest capacity factors occur in the winter months (Jan-March) and drop significantly in the summer months (Jun-Aug).

• Solar energy (dark blue line): Efficiency rises in the spring (Mar-May) and reaches its maximum in the summer months (Jun-Aug) before falling in the winter (Nov-Dec).

The graph illustrates that wind and solar energy can complement each other seasonally: While wind is more efficient in winter, solar energy provides the highest yields in summer. This shows how important a balanced energy mix is to ensure security of supply.

In addition to finding environmentally friendly energy sources to power data centers, technology providers can reduce emissions intensity through efficiency gains.

The following chart shows the development of the workload and energy consumption of data centers between 2015 and 2023. Although the workload almost tripled, energy consumption remained almost constant until 2019 thanks to efficiency gains. The efficiency gains then slowed down from 2020 onwards.

Source: [4], primary: Masanet et al. (2020), IEA, Cisco, Goldman Sachs Research

This chart supports the discussion on the Jevons paradox (see below). Efficiency gains could be offset or even exceeded in the long term by higher workloads and AI demand. This highlights the need to make data center energy sources more sustainable.

• Nuclear energy:

Meanwhile, governments are also becoming more supportive of nuclear energy on the whole. Switzerland is reconsidering the use of nuclear generators for its electricity supply, while nuclear energy enjoys bipartisan support in the US and the Australian opposition party has put forward plans to introduce nuclear reactors [4].

Participants at the COP28 conference at the end of 2023, an annual summit convened by the United Nations to combat climate change, agreed to triple global nuclear capacity by 2050 [4].

Nuclear energy is considered the ideal option for basic power supply as it provides a reliable and constant supply of energy.

As a result, more and more large tech companies such as Alphabet, Amazon and Microsoft are turning to small modular nuclear power plants (SMRs).

📊 Increasing efficiency & the Jevons paradox

With new technologies such as DeepSeek, AI could work more efficiently in the future. But does greater efficiency automatically mean that less computing power is required?

The Jevons paradox: More efficiency = more consumption?

The Jevons paradox describes the fact that increases in efficiency often do not lead to lower consumption, but to higher consumption overall.

-Example:

In the 19th century, more efficient steam engines did not lead to lower coal consumption; on the contrary, as the machines became cheaper and more versatile, coal consumption actually increased.

With cars: more fuel-efficient engines did not lead to less gasoline consumption, but to people driving more cars.

-Applied to AI:

As AI models become more efficient, the cost per computation decreases. This makes AI applications attractive in even more areas, which in turn leads to a higher overall demand for computing power.

🌎 Regional distribution and global expansion of data center infrastructure

Current distribution: Where are the data centers located today?

Today, most data centers are located in the Asia-Pacific region and North America. Well-known locations are:

North America:

- Northern Virginia

- San Francisco Bay Area

Asia: Beijing

- Beijing

- Shanghai

These regions are characterized by high computing power, intensive data traffic and strong demand from corporate campuses [1].

The chart also shows the historical development of data center capacity by region (North America, APAC, etc.) from 2017 to 2024. The figures illustrate how fast the infrastructure for the AI revolution is growing and underlines why the energy requirements of data centers are increasing so rapidly.

The increase in capacity from around 20 GW in 2017 to almost 60 GW in 2024 shows an enormous growth trend. This correlates directly with the increasing demand for AI applications and cloud computing.

How is supply growing?

Goldman Sachs Research estimates that global data center capacity will increase to around 122 GW by the end of 2030, as mentioned above. The share of hyperscalers and specialized operators will increase from the current 60% to around 70% [1].

• Asia-Pacific:

The largest expansion of data centers has been recorded here in the past ten years.

• North America:

The largest expansion of new data centers is planned in North America over the next five years.

📈 Investment opportunities: Some winners of the AI and data center revolution

US shares e.g.:

• Carrier Global $CARR (+2,26%) : Precise cooling technology and air conditioning for data centers
• Vertiv Holdings $VRT (+6,14%) : Specialist in cooling and power solutions specifically for data centers
• Brookfield Renewable Partners $BEP.UN : Leading provider of renewable energy (hydropower, solar, wind) - supply contracts (PPAs) with data centers
• ON Semiconductor $ON (+5,28%) : Leader in chips for energy efficiency and thermal management. Solutions reduce power consumption in data centers and support AI integration
• Texas Instrumentes $TXN (+0,55%) : Energy-saving semiconductor products used in data center servers
• Equinix $EQIX (+0,31%) : Specialized in data center infrastructure
• Digital Realty $DLR (+2,31%) : Provider of physical infrastructure for data centers
• IBM $IBM (-2,47%) : Quantum computing technologies that potentially consume less energy and development of energy-efficient AI solutions
• Arista Networks $ANET (+4,76%) : Specialist in high-speed networking products for data centers
• Nvidia $NVDA (+2,65%) : Leader in AI GPUs, Leader in AI training market. Best choice for large AI models and data center training
• AMD $AMD (+3,01%) Competing with Nvidia with its own AI chips, but better positioned in the AI interference market where energy efficiency and cost-effectiveness are key. The interference market will be the next most important market, perhaps even the more important one.
• Broadcom $AVGO (+5,22%) Profits from network solutions for data centers
• Microsoft $MSFT (+2,08%) Google $GOOGL (+5,72%) Amazon $AMZN (+3,74%) : The big hyperscalers investing heavily in AI and cloud

European stocks e.g.:

• Siemens Energy $ENR (+2,1%) Important role in modernizing power grids, integrating renewable energies and improving storage solutions for data center reliability
• Schneider Electric $SU (+1,46%) : Leader in the development of energy management and cooling technology for data centers - specialty in the automation of both systems.
• ASML $ASML (+1,87%) : Indispensable for modern chip production
• Infineon $IFX (+6,2%) and STMicroelectronics $STM (+5,97%) : Leading semiconductor companies with a focus on AI applications
• RWE $RWE (+0,92%) and Enel $ENEL (+1,37%) Utilities that are increasingly focusing on renewable energies for data centers

Japanese stocks e.g:

• Daikin Industries $6367 (-1,28%) World market leader in air conditioning and cooling, offers specialized cooling systems for data centers and AI-supported plant management systems to further increase efficiency
• Tokyo Electron $8035 (+4,38%) : Important supplier for semiconductor manufacturing
• Mitsubishi Heavy Industries $7011 (+1,72%) : Works on the development of new nuclear power plants to secure the energy supply

🧠 Conclusion: AI, data centers & energy as the trend of the century?

Although some analysts warn of possible overinvestment, the figures indicate that the demand for computing power and energy for AI data centers will continue to rise sharply.

• Efficiency gains from models such as DeepSeek or new chip technologies could reduce energy consumption per computer, but the Jevons paradox means that overall demand will increase because more efficient systems will be used more often.

The biggest winners are therefore:

• Semiconductor companies: They supply the AI chips needed.
• Data center operators: They build the necessary infrastructure.
• Energy suppliers: They ensure the energy supply for the AI revolution.

In the long term, these companies could be among the biggest beneficiaries of the coming decades.

👨🏽‍💻 How do I position myself?

Personally, I think I am well positioned with the NASDAQ 100 $CSNDX (+2,07%) (portfolio share of 23%), as the focus is on US technology and growth stocks. The ETF complements my All-World with a stronger weighting in innovative sectors such as AI and cloud computing.

In the near future, I will also take a closer look at Daikin Industrie $6367 (-1,28%) share in order to increase the exposure to Japan and the share price offers an entry point at first glance.

In addition, AMD $AMD (+3,01%) has also caught my attention, the reason being its positioning in the aforementioned interference market. Most of the capital is currently flowing into the expansion of new AI models. However, as soon as these become a "commodity" and everyone uses them, most of the capital will probably flow into the interference market (market for the application of AI models).

Furthermore, I have Siemens AG $SIE (+2,75%) with approx. 2.3% portfolio share (still growing to approx. 4%), which I also see as well positioned for the future for the following reasons (in the context of the article):

Network stability

• Develops technologies for intelligent power grids ("smart grids"), essential for integrating renewable energies into the supply of data centers.

Data center control

• Provides automation and monitoring systems that optimize the energy consumption and efficiency of data centers

Efficient building structure

• The "Smart Infrastructure" division supports data centers with energy-efficient solutions for lighting, air conditioning and building monitoring

Not directly cooling systems, but:

• offers technologies that increase the energy efficiency of cooling systems by optimizing energy flows and data analysis

What is your opinion❓

• Which companies do you have on your radar?
• Is there a threat of overinvestment or are we just at the beginning of a century revolution?

Thanks for reading! 🤝

...Said digression follows after the sources...

__________

Sources:

[1] https://www.goldmansachs.com/insights/articles/ai-to-drive-165-increase-in-data-center-power-demand-by-2030

[2] "The Coal Question"
http://digamo.free.fr/peart96.pdf

[3] https://de.m.wikipedia.org/wiki/Jevons-Paradoxon

[4] https://www.goldmansachs.com/insights/articles/is-nuclear-energy-the-answer-to-ai-data-centers-power-consumption

[5] https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai

[6] https://www.cbre.com/insights/reports/global-data-center-trends-2024

__________

🧭 Digression: on gigawatts and terawatt hours

In order to understand the relationship between the two figures, 122 GW (gigawatts) and 1,000 TWh (terawatt hours), it is important to clarify the units and their meaning:

• 122 GW (gigawatts):

Refers to the current average power capacity that data centers worldwide require to function. Power (measured in GW) describes the amount of energy consumed per second. This is therefore a snapshot of energy requirements.

• 1,000 TWh (terawatt hours):

This is an indication of energy consumption over a certain period of time, in this case one year. It describes how much energy is required in total in 12 months.

The forecast of 1,000 TWh is slightly below the value resulting from the calculation. The graph shows values slightly above 1,000 TWh; according to the calculation based on 122 GW of power capacity, energy consumption should be around 1,069 TWh.

Nevertheless, general reasons for deviations may be as follows:

• Efficiency improvements: Data centers could operate more efficiently through improved cooling, optimized hardware and software and thus consume less energy.
• Peak vs. average consumption: The figure of 122 GW could reflect peak demand, while the actual average annual demand is somewhat lower.
• Adjustments to the model: It is possible that the forecast of 1,000 TWh is conservative and does not take into account all additional loads or regional differences.

This shows how much the demand for data centers and energy will increase due to AI and digitalization by 2030

__________

Podcast episode 72 "Buy High. Sell Low."

Subscribe to the podcast to get nuclear power plants back on the grid in Germany. Inshallah.

00:00:00 20 power stocks for AI: Constellation Energy, Rolls-Royce, Schneider Electric, Siemens Energy, Cameco, Fluor Corporation, Vistra Corp, RWE, GDF Suez, Enel, Flowserve, Uniper, Crane Co, Quanta Services, MasTec, Legrand, Emerson Electric, Eaton Corporation, Uranium Energy, VanEck Uranium and Nuclear Technologies ETF A3D47K

39:30 Watchlist Max: Fluor Corporation, Schneider Electric, Quanta Services, MasTec, Legrand, Eaton Corporation

00:41:00 AMD

01:10:00 Apple

Spotify

https://open.spotify.com/episode/08XzNKA3nuiMlpcz9BYixB?si=qhG3ie7ETXm8O20VPEsp_w

YouTube

https://youtu.be/6olb6fp5AbQ

Apple Podcast

https://podcasts.apple.com/us/podcast/folge-72-20-stromaktien-f%C3%BCr-ki-amd-apple/id1695869891?i=1000684571374

#podcast
#spotify
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