According to investment firm Morgan Stanley, electricity demand is going to prove to be resilient regardless of any recession that may come into play from Trump’s tariff policies. This is because data centers need a lot of power, and demand will not go down despite a downturn or because of efficiency gains from Ant Group, DeepSeek, and others. While it is true that industrial demand may dip in the short term, bringing manufacturing back to the US will help solve this problem.
“We believe power demand trends are more durable than in prior cycles, in part due to the inelasticity of data center demand. Industrial demand could decline in the near term, but reshoring of manufacturing is a long-term tailwind.”
-Analysts led by Andrew Percoco.
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A similar analysis by a Bloomberg report forecast that US power demand coming from data centers could swell 20-40% in 2025, with strong double-digit growth likely to persist in 2026-30.
While Morgan Stanley does acknowledge that rapid policy changes may have deep implications for large capital investments, it also forecasts electricity consumption from artificial intelligence growing tenfold by 2028.
“With this in mind, we do not want to minimize the risk of a near-term ‘shock’ in demand. This could translate into slowing order growth for some companies.”
History has shown energy stocks to remain resilient despite economic downturns. The firm noted how, since 1960, demand has fallen by just 0.2% on average during such periods.
“Utilities screen favorable in a recession given their defensive nature,”
That said, it is optimistic about strong spending on AI infrastructure from tech giants such as Meta, Amazon, and Alphabet. This is because hyperscalers want to have a lead in artificial intelligence and also because they have large product pipelines that need GPUs.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024.
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10. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 42
Bloom Energy Corporation (NYSE:BE) develops solid-oxide fuel cell systems for on-site power generation, helping meet the growing energy demands of AI data centers. On April 18, Truist analyst Jordan Levy lowered the firm’s price target on the stock to $19 from $22 and kept a “Hold” rating on the shares. While there are concerns of a pullback in artificial intelligence spending and worries surrounding tariffs, the firm is optimistic that Bloom Energy will maintain its momentum in the data center space. At the same time, macroeconomic uncertainty and AI models’ efficiency may make it difficult for Bloom’s time-to-power story to warrant a further premium multiple amongst hyperscaler/datacenter customers.
9. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 63
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On April 15, William Blair analysts told investors in a research note how Palantir’s deal with NATO has broader geopolitical significance. Instead of just another win, the deal matters globally as some investors are concerned that Europe is looking to decrease reliance on U.S. defense contractors. The firm contends that the win has favorable read-throughs across the U.S. defense sector and that Europe will likely remain a large buyer of U.S. systems. The firm has a “Market Perform” rating on the shares.
