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- Manlobbi
Personal Finance Topics / Macroeconomic Trends and Risks
No. of Recommendations: 12
Before we throw the sparks around, one wonders where the liquidity comes from to finance the growth of AI. I suspect the advent of cryptocurrency (where "money" can be conjured from thin air by the use of power) has something to do with it. Anyway, it has been clear to me for some time that, between the growing number of EV's, the multiplying of sects of cryptocurrency and the power required by AI, the US and European (not to mention the assorted Asian) electrical grids will need substantial enhancement. While wire tends to be a commodity manufactured by a wide swath of companies, the rest of the infrastructure tends to be pretty concentrated in a relatively small number of companies.
The following is a list of important sources (many of which have recently appreciated substantially) - Disclosure, I have owned nine of the companies listed below for a number of years, some of the foreign ones for over a decade:
Jeff
United States & Europe Leading Generator Makers
GE Vernova (General Electric, US/Europe):
The world leader, GE Vernova generators produce about a third of the worlds electricity.
Provides a huge range of thermal (gas, steam), hydro, and grid-scale generators.
Key partner in large new peaker plants, grid resilience projects, and hydrogen-ready turbines in both the US and Europe.
Siemens Energy (Germany/EU):
Major provider of large power generators and flexible, hydrogen-ready turbines for utilities across Europe and globally.
Focuses on high-efficiency, low-carbon, and future-oriented grid systems.
Mitsubishi Heavy Industries / Mitsubishi Power (Japan/EU/US):
Leading in high-capacity gas turbines, peaker plants, and hydrogen-adaptable generators.
Heavy presence in both US and European markets, especially where advanced thermal tech is needed.
Caterpillar Inc. (US):
Market leader for diesel/gas grid backup generators, industrial-scale gensets, and grid peak-shaving solutions.
Cummins Inc. (US):
Top supplier of industrial, grid, and backup generators, increasingly focused on AI-optimized and hybrid solutions.
Ansaldo Energia (Italy/EU):
Builds heavy-duty power plant turbines and utility-sized generators, especially in Southern and Western Europe.
Kohler Co. & Generac Holdings (US):
Market leaders in backup and distributed grid-scale gensets, especially for resilience, microgrid, and commercial installations.
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Key Types of Grid-Enhancing Generators
Grid-scale gas (and hydrogen-ready) turbines
High-capacity diesel/gas generator sets (gensets)
Advanced combined heat and power (CHP) units
Backup/peak-shaving units for resiliency and renewables integration
________________________________________
Market Outlook
AI-enabled, high-flexibility designs are prioritizedthe new generation is built for resilience and easy integration with renewables, battery storage, and smart grid control.
Utilities in the US and Europe typically select from the global leaders above for enhanced reliability, uptime, and regulatory compliance.
In summary:
GE Vernova, Siemens Energy, Mitsubishi Power, Caterpillar, Cummins, Ansaldo Energia and Kohler are the primary suppliers of utility-grade generators for power grid enhancement in Europe and North America
The leading companies that manufacture electrical infrastructure equipment (including grid hardware, transformers, switchgear, circuit breakers, automation systems, etc.) in the US and Europe are:
Major Manufacturers in Europe and the US
1. Siemens AG (Germany/EU)
Specializes in grid control systems, high voltage equipment, switchgear, smart grid technologies, automation, transformers, HVDC systems, and renewable integration solutions.
Siemens Energy (spinoff) leads in clean grid technology.
2. General Electric (GE Vernova) (US/EU)
Major provider of grid solutions, transformers, switchgear, metering, automation, and power generation products; large presence in both the US and Europe. Key for grid modernization and smart infrastructure.
3. ABB Ltd (Switzerland/EU)
Global leader in power grids, substation automation, transformers, switchgear, EV charging, industrial motors, and smart grid/distribution solutions.
4. Schneider Electric (France/EU)
Specializes in energy management, smart grid components, building management systems, controllers, industrial automation, and medium voltage distribution.
5. Eaton Corporation (US/EU)
Leading in power management, switchgear, UPS systems, transformers, and energy storage solutions; strong in renewables distribution and microgrid solutions.
6. Legrand SA (France/EU)
Noted for digital and building infrastructure, intelligent circuit protection, and commercial/residential electrical components.
7. Emerson Electric Co. (US)
Focused on industrial automation, process control, advanced SCADA systems, and energy efficiency.
8. Hitachi Energy (Japan/EU/US)
Key in transformer manufacturing, high-voltage equipment, and renewable grid integration (especially in HVDC and offshore applications).
9. Rockwell Automation (US/EU)
Leader in industrial control, grid automation, digital grids, and automation software.
Other Notable Names
Bosch Rexroth (Germany - privately owned): automation and industrial power solutions.
Mitsubishi Electric (Japan/EU/US): key in transformer and HVAC/grid integration.
No. of Recommendations: 0
Jeff,
I had dinner tonight with an old friend and his female friend. Both retired, she was an economist for Texaco.
I had to ask about raising corporate taxes. She said she would not touch that issue.
I retort that if you went into work and told them they needed to support higher taxes, you'd be clearing out your desk by noon.
We need higher corporate taxes to spur growth. AI, Crypto, tariffs, none of it will spur much growth.
AI is being built no nothing added. It is a gambling house of cards.
No. of Recommendations: 9
You are "mixing metaphors" by conflating two (or maybe ten) issues.
First taxes. Back in the mists of time, people decided that by pooling resources they could address mutual problems much more effectively than each could do on their own. Sometimes these payments are called taxes, sometimes they are called insurance, sometimes they have fancier names. Simplistically, one of the primary functions of government is to coordinate these collections of funds and their use. We have multiple layers of government, each of which has been "assigned" responsibility to provide selected services - federal, state, local, HOAs, etc.
If one of those decides to cut services, the "people" must decide whether to change the politicians running that branch, assign the service to another layer or do without it (with that cut presumably lowering their taxes). Each layer would fight to have another layer be responsible for collecting the required funds as no politician, regardless of layer, wants to be the bearer of bad news that the taxes they are responsible for have to be raise.
Currently, the federal government is in the process of cutting income taxes as well as services and replacing the revenue with tariffs (which are, effectively, a sales tax on the consumer). If a service which people find is important, but has been cut, their options are still the same outlined above (and watch the game of "musical chairs" as local politicians try to doge raising taxes to replace the services cut by the federal government.
Crypto, in my opinion a branch of alchemy, seems to be creating something that people treat as money out of thin air (actually out of substantial use of electricity to power computers). Whether this is another blip in the pan as a short-time fad or not is dependent on whether governments support the idea. While politicians can be bought, it is important to recognize that this is not only a tool which is very beneficial to money launderers, but also can be an unexpected/unregulated source of liquidity which can cause significant inflation of asset prices beyond the control of government regulators (such as the Fed). The cryptocurrency is actually worth anything, depends on thee semi-religious belief that it is.
Now, to the reason for my post:
Whether you believed in religion or not, the Spanish Inquisition, the Salem witch trials, even the cynical usurping of the assets of the Knights Templar by the king of France (leaving us with Friday, the 13th as an unlucky day), were real and had temporal effects which lasted over a considerable period of time. The global use of electricity, whether caused by AI, cryptocurrency generation or use of EV's i rising exponentially and electrical grids which were created a century ago simply are not able to cope. While the users will be paying their concurrent bills, the system has to be beefed up and utilities will be able to recoup these capital expenses on the backs of their current customers.
So, while AI may be sexy, picking the long-term winners is challenging. On the other hand, it is pretty obvious that electrical utilities will be receiving more revenue (once they have finished pinging their customers to pay for their new build-outs) as well as electrical equipment manufacturers will benefit. While regulators can force utilities rates lower to prevent "excessive profits", over the long run, they should benefit. On the other hand, equipment expenses will be front-loaded and not held by regulation, but rather by competition. In addition, for some types of equipment, such as generators, there is a continuing stream of service revenue.
Another field which is bound to do well over the next five years (and longer) is the world's defense manufacturers. That's no secret and the cow has likely left the barn, but still worth thinking about (especially to track down subcontractors whose products are unique - Amphenol comes to mind, but there are dozens of these).
Now to AI.
This IS the real deal. So was the madness of the Dot.Com bubble. Those who chose Cisco, Amazon, E-Bay, Facebook and a handful of others made a fortune. Those who chose the vast majority of choices lost a fortune. It's pretty clear that this is going to follow the pharma model, with the "haves" (Apple, Amazon, Microsoft, X, Meta, for example) paying huge bucks to buy small, but unprofitable companies which have functionality they find useful. And a small handful of up-and-comers will fill new niches and become part of that pantheon. You probably have better odds in Las Vega than picking the winners at a good price.
That said, the big guys are spending billions of bucks to create tools that somehow they have to monetize. When you ask the Amazon AI for advice, expect it to give you a path which makes Amazon the most money, rather than pointing to the hidden bargain which would benefit you. Assume that Google Flights will somehow be compensated by those that are at the top of the list. If you want a "digital assistant" which prioritizes YOUR priorities, you may have to wait until one is vetted and then pay for it. (It still might not be perfect as its answers may, by definition, be derivatives of information garnered by utilizing AIs controlled by other firms.
The major challenge for society (or at least one of them) is that AIs can literally take the place of humans. I have, on occasion, while hearing repeatedly how import my call is, wished that an AI was handling the phones. In the foreseeable future, many professionals, from radiologists to lawyers to CPAs to engineers will find themselves on the bench. This will cause major upheavals because they would transition from being wage earners/tax payers to being on the dole. We, as a society would have to eliminate the stigma of being "unemployed" and feature "excess leisure time". The challenge is how to replace the lost tax revenue. At some point, someone will raise the idea of taxing major corporations on the basis of how many CPU chips they use or bandwidth or some other metric. But, by then, those firms will be so powerful as well as globally distributed to make that task incredibly difficult (just look at how rough it is to handle Tick Tock and multiply that by a thousand). So, yes, there is money to bee made by partial ownership (stocks) of AI firms, but ultimately "Human V 2.0" might make us wish for simpler times.
Jeff
No. of Recommendations: 0
Jeff
The best laid plans
Watch unemployment and then deflation
