Industry Overview: Data Center Infrastructure Transition to Direct Current Industry Overview - The industry is transitioning from alternating current (AC) to direct current (DC) power due to increasing rack power density in data centers. Nvidia's Rubin Ultra Kyber rack is expected to draw over 1,000 kilowatts (kW) [1] - The Open Compute Project's Mount Diablo rack supports up to 1,100 kW per rack, necessitating significant changes to electrical equipment [1] Key Product Launches and Order Trends - Order trends for vendors will diverge in 2H26, with shipments expected to start in 1H27. Nvidia plans to ship Vera Rubin Ultra (VR300) chips for the Kyber rack architecture in 2H27 [2] - Vertiv and Eaton have announced 800 VDC products available in 2H26. The VR300 NVL576 rack will have 14 times the performance of the current Blackwell Ultra (GB300) NVL72 rack [2] Equipment and Content Changes - Although DC simplifies electrical distribution, new DC equipment will be required, likely at premium pricing. Most low voltage (LV) equipment will be eliminated, but solid-state transformers (SSTs) will represent a significant new content area [3] - The power sidecar will include new battery backup units (BBUs) and supercapacitor units, while IT racks will require liquid-cooled busbars [3] Stock Recommendations - Companies recommended for investment include Eaton (ETN), GE Vernova (GEV), Schneider Electric (SU FP/SBGSY), Siemens (SIE GR/SIEGY), and Vertiv (VRT) as beneficiaries of the transition to DC architectures [4] - These companies have been recognized by Nvidia as power system providers and have developed reference designs for DC architectures [4] Electronic Components and Systems - New DC products will primarily consist of power electronics using solid-state semiconductors, which will be integrated into larger electrical systems. Successful vendors will need systems-level engineering expertise and the ability to provide ongoing maintenance [5][25] Timeline and Future Expectations - The transition to a fully realized 800 VDC architecture will occur in phases, allowing the industry to adapt and the component ecosystem to mature [9] - Data center developers are expected to invest in infrastructure to deploy VR300 racks, despite the challenges of implementation [21] Company Announcements and Innovations - ABB has introduced innovations like the HiPerGuard solid-state MV UPS and SACE Infinitus solid-state circuit breaker, aimed at enhancing power density and energy efficiency in AI data centers [27] - GE Vernova is collaborating with Nvidia to develop flexible solutions for existing data center requirements and future AI gigafactory deployments [33] Risks and Challenges - The report highlights potential risks, including the lack of standards and the existence of two competing DC architectures (Nvidia's Kyber and OCP's Mount Diablo), which could lead to less power-dense deployments [45] - Supply chain challenges for solid-state transformers and other niche components may hinder the transition [47][48] Conclusion - The shift to direct current in data centers represents a significant evolution in electrical architecture, with substantial implications for equipment, investment opportunities, and industry dynamics. Companies positioned to adapt to these changes are likely to benefit from increased demand and market growth.