Company and Industry Insights - Nvidia and AMD are expected to generate significant attention at CES, with Nvidia's CEO Jensen Huang likely to discuss the company's AI strategy, focusing on datacenters, physical AI, and robotics, along with updates on the Cosmos foundation model and autonomous technology for 2026 [3][4] - AMD's CEO Lisa Su will deliver the opening keynote at CES, where she is anticipated to announce major updates to the Ryzen CPU line and showcase developments in AI PCs, gaming, datacenters, and automotive computing [5] - Versant Media Group is set to begin trading following its spinoff from Comcast, positioning itself as a hybrid cable-digital media company with a focus on expanding beyond traditional media [7][8] - The U.S. government plans to invest in Venezuela's oil infrastructure, which has the world's largest proven crude reserves of over 303 billion barrels, indicating potential opportunities for U.S. oil majors [9]

Industry Focus - The report highlights that the scope extends beyond just datacenters [1]

AI & Robotics Focus - The discussion centers on "Physical AI," essentially referring to robotics [1] - Alibaba's partnership with Nvidia focuses on integrating Nvidia's software into Alibaba's cloud business to connect hardware devices, particularly robotics [2] Investment in Infrastructure - Alibaba plans to exceed its initial $50 billion investment in data centers and AI infrastructure [3] - The CEO of Alibaba projects a potential $4 trillion investment in data center infrastructure globally over the next five years [4] Nvidia & China Relationship - Nvidia's sophisticated software stack is a key aspect of its partnership with Alibaba [5] - The partnership focuses on software, potentially circumventing restrictions on the use of Nvidia's chips by Chinese AI companies like Alibaba and Tencent [6][7] - Alibaba is at the forefront of China's AI innovation, rapidly updating its AI models [7]

Investment Rating - The report rates the Utilities sector as "Buy" with a forecasted average EPS CAGR of +9% over 2024-2029 for the identified 'Electrification Compounders' [7]. Core Insights - The Utilities sector is expected to experience a new era characterized by low-risk, mid-to-high single-digit EPS growth and attractive capital distribution, driven by an inflection in power demand, a pivot in capital allocation, and the need to modernize the power system [1][7]. - European power demand has shifted from a 15-year decline to a projected annual growth of 1%-2%, supported by economic growth, electrification, and datacenters, with expectations for further increases later in the decade [2][15]. - A significant investment of approximately €2 trillion is required over the next ten years to modernize the European power system, addressing the aging infrastructure and rising demand [21][94]. Summary by Sections Executive Summary - Utilities are predominantly domestic and defensive, with a large share of regulated profits, positioning them well for organic growth due to the inflection in power demand and modernization needs [7]. - The report highlights key stocks such as Enel and SSE, which are expected to benefit from rising power demand and positive earnings revisions [7]. Power Demand - After 15 years of decline, European power demand is expected to grow by 1%-2% annually, with Germany projected to outpace the rest of Europe due to infrastructure investments and electrification [15][65]. - The report notes that power demand in Europe is currently about 10% below 2008 levels, but recent trends indicate a positive shift in consumption [46][49]. Capital Allocation - Over the past three years, capital allocation in the Utilities sector has shifted from top-line growth to maximizing returns, with a focus on modernizing power grids, which is expected to yield double-digit earnings growth [3][69]. - The report emphasizes that capital distribution has become more central, with Utilities increasing dividends and share buybacks [3][69]. Earnings Growth - The modernization of power grids and the focus on maximizing returns are expected to support mid-to-high single-digit EPS growth until the mid-2030s, leading to multiple expansions compared to historical valuations [4][24]. - The Utilities sector is anticipated to gradually re-rate towards the valuation levels of US Utilities, driven by rising power demand and investment needs [24][27]. Investment Needs - The report estimates that the European power system requires around €2 trillion in investments over the next decade, with a significant portion directed towards modernizing transmission and distribution grids [21][94]. - The aging infrastructure, with European grids being 45-50 years old, necessitates urgent upgrades to improve resilience and meet rising demand [21][97].