The analyst is bullish on a set of semiconductor and materials stocks that supply advanced power components for AI data centers, expecting strong demand from major tech companies upgrading their infrastructure.
AI data centers require upgraded power delivery systems using advanced materials like silicon carbide and gallium nitride, which only a few companies produce at scale. These companies' stocks have been beaten down due to slowed EV demand but are now seeing new strong demand from big tech firms, implying a generational growth opportunity.
In 1956 Eisenhower signed the Federal Highway Act and authorized 41,000 miles of new interstate highway across the United States. The existing roads worked fine. The problem was the traffic coming was nothing like the traffic they were built for. The companies supplying the concrete, the asphalt, and the heavy equipment never made headlines. They made generational money for a very long time. The same thing is happening inside every AI data center on earth right now. NVIDIA's 2027 rack pulls 600 kilowatts. That is the same power as 400 average American homes. The wiring running through every data center built before 2025 was designed for 40 kilowatts. At 600 kilowatts the old system does not run slow. It melts. The fix is called 800 volt DC. Instead of rebuilding every data center from scratch, a standalone power cabinet called a sidecar gets wheeled in and bolted next to the existing racks. The building stays exactly as it was. Only the power delivery at the rack level gets the upgrade. The chips inside that sidecar cannot be made from regular silicon. You need silicon carbide and gallium nitride. More advanced materials. More expensive. And only a handful of companies make them at real production volume. Those companies built their factories for electric cars. EV demand slowed. The stocks got crushed 40 to 60 percent off their highs. Now Amazon, Microsoft, Google, and Meta are showing up as the new customers and they are not bargaining on price. Full report covering my favorite names positioned for this trade is live. Link in replies and bio. $ON $STM $NVTS $WOLF $VICR $POWI $AOSL $VRT $AEHR
| Horizon | Raw move | vs SPY |
|---|---|---|
| 1 day | -9.4% | -7.9% |
| 1 week | -6.4% | -6.0% |
| 1 month | -17.7% | -18.1% |
| 3 months | — | — |
| 6 months | — | — |