Electric power has become a bottleneck for AI and the trend is unlikely to ease soon as AI chips are increasingly power hungry and as data centers capacity is expected to double globally over next years, sparking a surge in power demand in many countries.
Data centers will then have no choice but to become more energy-efficient and secure new sources of power. The growing mismatch between power needs and recent low grid infrastructure capex should spark actions on both data center electricity demand and global power supply.
On the demand side, the first and main step towards improving AI energy efficiency will be to shift data centers from air to liquid cooling. With air cooling failing to maintain monster AI chips at normal working temperatures, the data center and semiconductors industries are pivoting towards liquid solutions that are expected to cut power usage by 40%.
On the supply side, cloud giants have been seeking to secure specific power supply agreements with utilities. Nuclear power specifically is emerging as a key solution to tackle the energy challenge as its reliability and predictability make it an excellent complement to renewable energies.
More globally, this sudden power demand pick-up from data centers should spark a 2x or 3x increase in global electricity demand and structurally change the power market dynamics.
This should reenergize expectations about electric grid capex and open a multi-year cycle of growth for most companies involved in the power management ecosystem.
We are launching our Powering AI strategy in EUR (with USD hedging). While the USD trajectory has been a source of concern, the outlook for the Powering AI theme has never been stronger. Data center capex continues to surprise on the upside: recent hyperscaler announcements point to roughly $700 billion of spending in 2026, up…
The AI boom has quietly turned electricity into the most valuable input in tech, and the cloud giants are discovering an uncomfortable truth: the grid is not infinite, patient, or cheap. For years, hyperscalers treated power as a background problem, something to hash out with utilities while the real innovation happened in chips and code.…
As we expected, the concerns that emerged in the final months of 2025 and weighed on the AI trade are rapidly fading. Early earnings reports this season have shifted the focus back to what matters most: impressive growth and expanding margins. And worth noting, the equity rally is broadening. While our core AI portfolio is…
Over the past 12–18 months, Tech giants and U.S. utilities have ramped up investments in alternative power sources—particularly nuclear energy and on-site natural gas fuel cells—to address the growing power needs of data centers. Recent deal announcements (Meta with Vistra/Oklo/TerraPower and AEP with Bloom Energy) underscore an accelerating trend, reinforcing Powering AI and Nuclear Power…
The rationale for launching our Powering AI strategy 18 months ago was that the sudden and massive acceleration in electricity demand would force utilities to sharply increase their investments in power generation and transmission, providing a powerful tailwind for equipment suppliers and engineering firms. This capex upside is now becoming clearer, as several major electric…
The recent correction in AI equities increasingly looks like the two major sell-offs of the past 18 months (February–March this year and July-August 2024), suggesting that we are more likely in a healthy profit-taking phase than in the early stages of a bear cycle. The severity, speed, and magnitude are strikingly similar, with AI and…
Just months after President Donald Trump signed a series of executive orders aimed at reigniting the U.S. nuclear energy sector and initiating the construction of 10 new reactors by 2030, U.S. companies are already moving rapidly on this front. Two major announcements in the last couple of days underscore that momentum: Clean energy developer Brookfield…
According to Bloomberg, U.S. Energy Secretary Chris Wright is urging the Federal Energy Regulatory Commission (FERC) to grant expedited reviews for data-center grid connections. Under the draft rule, reviews would be capped at 60 days, compared with the years such approvals currently take. If adopted, the measure would mark another step in the Trump administration’s…
Data centers are evolving at breakneck speed. Artificial intelligence (AI) and high-performance computing (HPC) are pushing power demands to new heights, with next generation AI clusters requiring nearly a megawatt per rack. Traditional alternating current (AC) distribution systems, built for lower loads, are buckling under these demands. Multiple power conversions, bulky cabling, and energy losses…
Even though building new nuclear or gas-fired plants and expanding solar and wind capacity will be essential to address the long-term power challenge posed by data centers, these initiatives won’t come online fast enough to meet short-term electricity demand. In the meantime, transitory power solutions are needed — and fuel cells are increasingly emerging as…
Microsoft announced yesterday that it has been testing a new chip cooling technology based on microfluidics, which it says removes heat up to three times more effectively than today’s data center liquid cooling standard, cold plates that are placed on top of chips. The approach channels liquid coolant directly into the processor through microscopic, vein-like…
U.S. Energy Secretary Chris Wright stated yesterday at the International Atomic Energy Agency’s annual conference that the United States is “furiously at work” to rebuild its nuclear fuel supply chain and called for a significant increase in strategic uranium reserves. Data from the IAEA highlight the urgency: U.S. uranium inventories cover only about 14 months…
Cameco announced last night a cut to its production guidance for the McArthur River mine, one of the world’s largest and highest-grade uranium deposits. Output is now expected at 14–15 million lbs in 2025, down from the previous 18 million lbs target, as operations were hampered by development delays and the timing of ground freezing.…
The largest U.S. electric capacity auction, run by grid operator PJM— which serves roughly 20% of the U.S. population — cleared at $329.17/MW-day last night. That’s a 22% increase over last year’s record and well above market expectations. PJM’s capacity auctions determine how much electric utilities will be paid in exchange for committing to provide…
We’ve long argued that we’re still in the early innings of the AI infrastructure buildout and the announcements at last week’s Pennsylvania Energy and Innovation Summit confirmed just how early we are. President Trump unveiled a massive $92 billion investment package from the private sector focused on AI and energy infrastructure in Pennsylvania, signaling the…
Constellation Energy, the largest operator of nuclear power plants in the U.S., announced yesterday that its Three Mile Island / Crane nuclear facility in Pennsylvania—shut down in 2019 for economic reasons—will restart operations in 2027, nearly a year ahead of schedule. As a reminder, Constellation disclosed in September last year that it would bring the…
After Amazon and Microsoft last year, Meta has become the third hyperscaler to secure a long-term nuclear power supply agreement to support its AI infrastructure. Starting in June 2027, Meta will purchase the full output of Constellation Energy’s Clinton nuclear plant in Illinois—a facility that had previously been slated for closure—under a 20-year deal. This…
On Friday, President Donald Trump signed a series of executive orders designed to reignite the U.S. nuclear energy sector. These orders instruct the Nuclear Regulatory Commission to streamline the licensing process and cut regulatory red tape for new reactors and power plants—a timely move as U.S. electricity demand is forecast to reach record highs in…
After the latest tariff twists and chips export restrictions to China, initial earnings in the AI space were widely expected. They didn’t disappoint, with both Taiwan Semi and Siemens Energy releasing strong quarterly figures and either maintaining or exceeding full-year expectations. Taiwan Semi, the leading maker of chips whose growth has been buoyed in recent…
It’s been a turbulent few weeks, with tariff uncertainty fueling broader concerns about the macroeconomic outlook and, specifically, about the AI spending environment. Even if semiconductors were initially expected to be spared from tariffs, the prospect of an economic downturn affecting the core businesses of major hyperscalers—such as declining advertising revenues at Google and Meta,…
At last week’s GTC conference, Nvidia provided a glimpse of its upcoming AI chips, including the Rubin Ultra GPU, set to launch in late 2026. This next-generation AI accelerator is expected to consume up to 1.8kW per unit and 600kW per rack, a significant jump from previous models. For comparison, the current GB200 draws 1.2kW…
Another week, another report about the need to enhance the electric power infrastructure in the U.S. with the Electric Reliability Council of Texas, which manages the local grid, estimating that the state would need the equivalent of 30 additional nuclear plants by 2030 to meet its electricity needs. Meanwhile, PJM, the largest electricity grid operator in…
PJM, the largest electricity grid operator in the U.S., serving 13 states including Pennsylvania, New Jersey, and Maryland, has received federal approval from the Federal Energy Regulatory Commission (FERC) to fast-track the review of up to 50 new power plant projects. This decision follows President Donald Trump’s national energy emergency declaration and addresses growing concerns…
The initial panic triggered by DeepShitSeek is starting to subside as more information comes to light. Recent reports indicate that the true cost of their training process was closer to $500 million, not the $6 million initially claimed. Additionally, it appears that DeepSeek’s LLM performance isn’t as groundbreaking as first suggested, with revelations that the…
As promised during his campaign, President Donald Trump declared a national energy emergency following his inauguration and signed several executive orders aimed at boosting domestic fossil fuel production while reversing many of the clean energy policies from the Biden era. Trump, along with key cabinet members such as Doug Burgum, the newly appointed Secretary of…
Synapse Invest was founded in 2019 with the mission of offering a diverse range of thematic investment products centered around innovation. Our journey began with the launch of our first Actively Managed Certificates (AMCs) in the closing weeks of 2019, and we are now proud to celebrate more than five years of consistent growth and…
We have been highlighting for months that, even if deploying new solar/wind capacity and building/reopening nuclear plants are key to tackling the power challenge arising from data centers in the medium and long term, these initiatives are unlikely to come online fast enough to handle short-term extra electricity demand. Accordingly, transitory solutions to fill the…
GE Vernova kicked off the earnings season in style for the electrification/powering AI theme last week, with two of its three main units delivering impressive results. The group’s Power unit (generation equipment) recorded a significant +470bp margin expansion to 11.9% and 34% bookings growth, while the Electrification unit (grid equipment) grew 22% and boasted a…
After Microsoft, that is financing the restart of an idle reactor, Amazon and Google just made the headlines by announcing that they both will bet on a very promising technology, small modular reactors or SMRs. The former (which also acquired earlier this year a data center powered by an adjacent nuclear power plant) will partner…
On Friday, US electric utility Constellation announced the restart of its Crane nuclear plant, that had been shut down in 2019 for economic reasons, along with a 20-year power supply agreement with Microsoft. The Tech giant will then secure 835 MW of power over 20 years to supply its data centers in the PJM Interconnection,…
Just months after the US Senate passed the ADVANCED Act, a landmark legislation designed to ease the permitting process for nuclear reactors and reduce costs and construction times (see our previous report), various US administrations are moving fast on the nuclear topic. The Nuclear Regulatory Commission (NRC) indeed exempted Kairos Power from a full environmental…
If one needed further evidence that we are heading towards a growing supply/demand imbalance for uranium, last week’s news flow provided it. Kazatompron, Kazakhstan’s state-owned uranium miner (and the world’s largest), announced (again) a cut to its 2025 production forecast due to continued sulphuric acid shortages and delays in construction works at new deposits. The company…
With AI electricity consumption surging and utilities starting to have difficulties meeting demand, both cloud giants and utilities are actively looking at solutions to tackle the power challenge. Deploying new solar/wind capacity and building nuclear reactors (or reopening idle ones) are clearly part of the agenda. But these initiatives also represent a multi-year effort, suggesting…
The US gave a major boost to its nuclear industry yesterday as the Senate passed the ADVANCED (Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy) Act with overwhelming bipartisan support, and as the DoE announced it would fund up to $900 million to support the deployment of small modular reactors (SMRs). The ADVANCED Act is a…
NAV & Performance
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ISIN
XS2817746469
Currency
USD/EUR
Type
Active Equity
Issuer / Rating
Morgan Stanley / S&P A+
Inception Date
16.07.2024
Liquidity
Daily