Heard on the Street: Companies are converting aircraft engines to land-based natural gas turbines for power generation in the AI boom https://t.co/ApdynkqIVt ...

Market Overview - Stocks rebounded on Friday, led by technology, despite a poor week overall for the S&P 500 and Nasdaq [1] - The best performing sector was consumer staples, which rose 13% in 2026, marking their best year in decades [1] Company Earnings and Capital Expenditure - Meta Platforms invested $22.14 billion in Q4 and $72.22 billion for the full year 2025, with anticipated spending of $115 billion to $135 billion in 2026 [1] - Microsoft spent $37.5 billion on capital expenditures, with analysts projecting $148 billion for the fiscal year [1] - Alphabet reported $27.5 billion in Q4 capex and $91.4 billion for the year, expected to increase to $175 billion to $185 billion in 2026 [1] - Amazon's capex was $39.5 billion in Q4 and $128 billion for 2025, planning to invest $200 billion in 2026 [1] Investment Opportunities - Broadcom shares are down about 4% year-to-date and 20% from their all-time high, prompting an upgrade to a buy-equivalent rating due to increased capex plans from major clients like Alphabet and Meta [1] - The anticipated increase in spending on AI infrastructure is expected to benefit various companies in the portfolio, including Nvidia, Eaton, GE Vernova, Dover, Corning, Cisco Systems, and Qnity Electronics [1] Upcoming Economic Data - The pace of earnings season will slow next week, with 15% of S&P 500 companies still scheduled to report, including DuPont and Cisco [1] - Key economic data to be released includes December retail sales, January consumer price index, and the January employment report, which is expected to show nonfarm job gains of about 70,000 and an unchanged unemployment rate of 4.4% [1]

Core Insights - Solaris is positioned to provide diverse power solutions, including natural gas turbines, battery energy storage systems, and renewable technologies, to meet the growing power demand [1][2][4] - The company has achieved record revenue and profit in Q3, indicating strong execution and significant progress in growth [4][14] - Demand for reliable power generation is accelerating, particularly due to the expansion of data centers and associated power needs [4][19] Company Performance - Solaris operated approximately 760 megawatts in Q3, a significant increase from 150 megawatts a year ago, demonstrating strong operational capabilities [5][19] - The company expects to reach a pro forma generation capacity of approximately 2,200 megawatts by early 2028, up from a previous target of 1,700 megawatts [6][15] - Q3 revenue was $167 million, with adjusted EBITDA of $68 million, reflecting a 12% growth from the prior quarter and over threefold increase compared to the same quarter last year [18][19] Strategic Developments - Solaris has expanded its capabilities through the acquisition of HVMVLV, enhancing its power solutions offering and enabling vertical integration [7][8][9] - The company raised approximately $748 million in convertible notes to improve financial flexibility and fund growth initiatives [17][18] - The commercial pipeline is robust, with ongoing evaluations of long-term opportunities in the power sector [6][22] Market Dynamics - The demand for power solutions is driven by the increasing size and complexity of data center projects, with many requiring over 1 gigawatt of electricity [3][4] - Grid delays and regulatory challenges are pushing developers to seek reliable power sources quickly, positioning Solaris favorably in the market [3][4] - The company is adapting to a growing interest in flexible power solutions, which include a mix of generation sources to meet diverse customer needs [7][51] Future Outlook - Solaris anticipates continued growth in power services, supported by incremental generation orders and strategic investments [13][22] - The company is focused on delivering strong returns on invested capital while maintaining market share in both Power and Logistics Solutions segments [22] - The evolving landscape of power demand suggests that Solaris will likely exceed its current capacity targets in the near future [59]

GE Vernova Outlook - GE Vernova is considered a core holding in large-cap growth portfolios due to the reanchoring around physical infrastructure in the US [5] - The company was last year's top pick with an 88% return, and is chosen again due to underappreciated opportunities in new orders and service contracts [5] - Trends of electrification and power are seen as drivers for GE Vernova [12] Natural Gas Turbine Market - Natural gas is viewed as the primary solution for firm base load power generation in the near and medium term [4] - GE turbines generate 50% of all electrons globally, excluding China [7] - The company has already surpassed all of last year's orders for natural gas turbines this quarter alone [7] - Turbine capacity has quietly doubled from 50 to 100 [9] - Pricing has tripled over the past 3 years, from $800 per kilowatt to $2,400-$2,500 [9] Service and Recurring Revenue - Each new turbine comes with a service agreement, creating a recurring revenue model [10] - The first outage requiring service isn't for 8 to 10 years, building a long-term revenue stream [10] - An acquisition of Prolle, not currently in models, will be integrated in 2026 [11] Tesla's Evolving Focus - Tesla is increasingly viewed for its autonomy and energy businesses [14] - The automotive business is valued at only $30-$40 per share [15] - Energy has grown to be equal to or slightly more valuable than the auto business [15] - Autonomy makes up over 70% of Tesla's value today [15]

Core Viewpoint - The current earnings season highlights significant supply constraints across various industries, which is leading to better-than-expected earnings for companies like Intel and others in the tech sector [1][2]. Technology Sector - Intel reported earnings that exceeded expectations due to supply constraints, allowing the company to raise prices, which is advantageous in any industry [2]. - Companies such as SanDisk, Western Digital, and Sea are experiencing strong stock performance due to their pricing power amid supply constraints, which have historically hindered their profitability [3]. - Micron is also noted for its supply constraints, which have led to a reevaluation of demand expectations [5][6]. - AMD's stock rose 7.6% following discussions about its supply constraints and partnerships in quantum computing [4]. Aerospace Industry - Boeing is expected to report on supply constraints affecting all its aircraft, particularly the 737 models, due to regulatory challenges and past mishaps [7]. - Major suppliers to Boeing, including General Electric, RTX, and Honeywell, are benefiting from increased demand for aircraft and maintenance services [7]. Energy Sector - Genova is highlighted for its supply constraints in power equipment, particularly large turbines used in data centers, suggesting potential for growth [8]. - The high cost of these machines, which can reach up to $100 million, positions Genova favorably in the market [9]. Precious Metals - The supply of gold remains constrained despite high prices, with foreign supplies becoming increasingly difficult to access due to tougher terms from host countries [10][11]. - The overall trend indicates a persistent imbalance between demand and supply across multiple industries, which is favorable for stock performance [11].

Group 1 - GE Vernova Inc. (NYSE:GEV) is identified as a trending stock benefiting from the AI data center buildout, with significant electricity demand growth expected [1][3] - The company provides technologies and services for generating, converting, storing, and managing electricity across various sources, including gas, nuclear, wind, and solar [3] - GE Vernova's backlog extends into the next decade, driven by increasing demand for gas turbines and potential growth from nuclear power solutions [3] Group 2 - The Stargate data center in Texas has built its own natural gas plant, featuring 10 natural gas turbines, half from GE Vernova and half from Caterpillar's Solar Turbines [2] - The natural gas turbines at Stargate are simple cycle, each with a capacity of 35 megawatts, which is considered lower-end technology [2] - The investment in these turbines reflects a strategic choice to balance cost and time, as higher-end options would require a longer lead time for deployment [2]

Group 1 - Caterpillar Inc (NYSE:CAT) is highlighted as a trending stock, particularly in the context of the AI trade and its involvement in the Project Stargate facility in Texas [1] - The facility has built its own natural gas plant, utilizing simple cycle turbines, with each turbine rated at 35 megawatts, which are considered lower-end compared to other options [1] - Caterpillar's subsidiary, Solar Turbines, provides half of the turbines for the natural gas plant, indicating the company's significant role in this project [1] Group 2 - There is a belief that while Caterpillar has potential, certain AI stocks may offer higher returns with limited downside risk, suggesting a competitive investment landscape [2] - The article mentions the existence of a report on an extremely cheap AI stock that benefits from Trump tariffs and onshoring, indicating a focus on strategic investment opportunities [2]

Xcel agreed to buy natural gas turbines — among the most sought-after equipment in energy markets today — from Siemens to power two power plants in West Texas https://t.co/YA6R4GYqTc ...

Core Insights - GE Vernova Inc. (NYSE:GEV) is recognized for its production of natural gas turbines, which are essential for various applications, including data centers, contributing to its strong market performance [1] - The company offers a diverse range of energy technologies and services, including gas, nuclear, hydro, steam, wind, solar, storage, and grid solutions [1] - Despite concerns regarding the wind energy sector, the focus remains on natural gas as a key growth area, with a recommendation to buy during price dips [1] Company Overview - GE Vernova specializes in energy technologies and services across multiple sectors, including power generation and electrification [1] - The company's portfolio encompasses various energy sources, indicating a broad approach to energy solutions [1] Market Sentiment - Jim Cramer expressed a positive outlook on GE Vernova, highlighting its relevance in the current energy landscape and its potential for long-term growth [1] - The stock has faced challenges, particularly related to political sentiments towards wind energy, but the emphasis on natural gas remains a strong point for investment [1]

Summary of Key Points from the Conference Call Industry Overview - The focus is on the energy sector, particularly the power requirements for AI and data centers in North America, with an emphasis on the conversion of Bitcoin mining sites to high-performance computing (HPC) data centers [1][3][29]. Core Insights and Arguments 1. **Surge in Demand for Compute Power**: There is an anticipated surge in demand for compute power, particularly for AI applications, expected to escalate in 2026 due to non-linear improvements in AI capabilities [1][3]. 2. **Power Bottleneck**: A significant power bottleneck is projected between 2025-2028, with a total shortfall of approximately 45 gigawatts (GW) for data centers, necessitating innovative power solutions [9][36]. 3. **Bitcoin Mining Sites as Solutions**: Bitcoin mining sites are seen as a viable solution to the power bottleneck due to their existing infrastructure and lower power costs, with an average cost of $44/MWh compared to $80/MWh in Northern Virginia [29]. 4. **Conversion Potential**: The conversion of Bitcoin mining sites to HPC data centers is highlighted as a high-value opportunity, with potential enterprise value creation ranging from $5-8 per watt, significantly higher than current Bitcoin mining stock valuations [15][16][17]. 5. **Federal Support and Policy Changes**: There is potential for federal support for new nuclear construction and initiatives to reduce U.S. dependency on critical materials from China, which could impact energy infrastructure investments [8][26][28]. Additional Important Insights 1. **Execution Risks**: The transition from Bitcoin mining to data centers involves execution risks, particularly in project construction and regulatory compliance, which could affect timelines and costs [33][34]. 2. **Megatrends in AI**: The rapid increase in computational power for training large language models (LLMs) is expected to double their intelligence, which could significantly impact economic valuations and the demand for energy infrastructure [22][23]. 3. **Market Dynamics**: The analysis suggests that as AI adoption increases, the relative value of energy infrastructure may rise, while the costs of AI-related assets may decrease, leading to a shift in economic paradigms [24][26]. 4. **Investor Considerations**: Investors are encouraged to assess the potential for Bitcoin-to-DC conversions and the associated risks and rewards, particularly in light of the projected power shortfall and the increasing urgency for data center capacity [35][36]. Conclusion The conference call emphasizes the critical intersection of energy infrastructure, AI development, and Bitcoin mining, highlighting significant investment opportunities and risks in the evolving landscape of power demand and technological advancement.