AI demand will push the power grid to the brink. Morgan Stanley says these stocks could benefit
Written by Emily J. Thompson, Senior Investment Analyst
Source: CNBC
- Surging Electricity Demand: Data centers are causing major delays in adding new capacity to power grids due to a surge in electricity demand, creating challenges for utility companies and grid operators.
- 2025 Grid Capacity Concerns: Power grids in the U.S. are expected to face significant challenges in 2025 when the number of proposed data centers exceeds the ability to connect them to electrical supplies.
- Interest in 'Time to Power' Solutions: Investors are showing increased interest in emerging solutions like small, quickly deployable natural gas turbines and generators to address current grid connectivity challenges.
- Texas Grid Challenges: Texas exemplifies the issue, with a substantial increase in power projects waiting for connection to the state's grid, leading to a rise in demand for backup generators.
- Benefiting Companies: Manufacturers like GE Vernova, Siemens Energy, Cummins, and Caterpillar are poised to benefit from the growing demand for natural gas turbines and generators as solutions to the grid connectivity issues.
Analyst Views on CMI
Wall Street analysts forecast CMI stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for CMI is 538.00 USD with a low forecast of 385.00 USD and a high forecast of 653.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
13 Analyst Rating
7 Buy
6 Hold
0 Sell
Moderate Buy
Current: 583.070
Low
385.00
Averages
538.00
High
653.00
Current: 583.070
Low
385.00
Averages
538.00
High
653.00
About CMI
Cummins Inc. is a global power solutions company. The Company’s segments are Components, Engine, Distribution, Power Systems, and Accelera. Components segment designs, manufactures, and supplies products which include axles, drivelines, brakes, and suspension systems. Engine segment manufactures and markets a range of diesel and natural gas-powered engines under the Cummins brand name, for on and off-highway markets. Distribution segment includes sale and support of a range of products and services, including power generation systems, high-horsepower engines, heavy and medium duty engines, and others. Power Systems segment is a power provider, which designs, manufactures and sells engines for industrial applications, prime power generator sets, alternators, and others. Accelera segment designs, manufactures, sells, and supports electrified power systems with components and subsystems, including battery, fuel cell and electric powertrain and hydrogen production technologies.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
