The quiet engine behind the AI boom

Much of the investment conversation over the past two years has been dominated by a small group of technology giants at the centre of the artificial intelligence boom. Less discussed, but arguably more durable, is what all this computing power depends on: electricity, and a great deal of it.

The numbers are striking. The International Energy Agency expects electricity demand from data centres to roughly double – from around 485 terawatt-hours in 2025 to about 945 by 2030, close to Japan’s entire annual consumption today – with demand from AI-focused facilities set to triple over the same period. Electric vehicles, reshored manufacturing, and broader digitalisation are all pulling in the same direction. The world is rapidly electrifying, and the grids built for a previous era are already straining to keep up.

This is giving rise to a multi-year, capital-intensive investment cycle: generating additional power, upgrading and expanding ageing grids, distributing electricity more efficiently, and cooling the data centres in which AI applications run. Much of the market’s attention has settled on the AI companies at the very centre of this trend, where valuations have become demanding. Yet the build-out they depend on opens a second, less obvious route to the same opportunity. Further down the value chain sit the established companies that enable electrification – those that generate, move, manage, and cool the power AI requires. Many are profitable, dividend-paying market leaders, well placed to benefit from rising electricity demand, largely regardless of which individual AI models or chip designs ultimately prevail. 

Examples of our holdings aligned to this theme include:

Schneider Electric is a global leader in energy management and automation, supplying the power distribution and cooling systems that modern data centres cannot run without.

Eaton Corporation specialises in intelligent power management – the electrical components and systems that move, protect and control electricity across grids, industries, and data centres.

Siemens brings deep expertise in industrial automation and smart infrastructure, electrifying factories, buildings, and transport networks the world over.

Air Liquide provides the industrial and ultra-pure gases essential to semiconductor manufacturing, the chips that power AI, as well as to the wider energy transition.

Each is a market leader with the pricing power, financial strength, and dividend track record we look for. Crucially, none is a speculative bet on a single technology or product cycle. They are diversified, highly cash-generative businesses positioned to benefit whichever AI applications, chip designs or electric vehicles ultimately prevail. 

These companies are also well placed to continue rewarding shareholders with reliable and growing income while the wider AI landscape continues to evolve. In our view, this is a compelling way to participate in the electrification of the global economy: exposure to a powerful, multi-year structural theme through established, quality businesses, rather than through the narrow band of names where expectations and valuations are already high. As with all our portfolios, the objective is a more predictable outcome, founded on genuine long-term growth and a careful regard for both risk and valuation.

These securities can be accessed via our international share portfolios and unit trusts.