William Blair initiated research coverage of GE Vernova Inc. (GEV $185.55), Tesla, Inc. (TSLA $209.29), First Solar, Inc. (FSLR $235.42), Enphase Energy, Inc. (ENPH $122.53), and SolarEdge Technologies, Inc. (SEDG $25.69).
With the publication of a comprehensive report titled The Power Behind Artificial Intelligence and accompanying reports initiating coverage of the five companies, analyst Jed Dorsheimer extended William Blair’s research coverage within energy storage and into energy generation, specifically solar and natural gas.
“Demand for data center growth has been building for the past 20 years, as increasingly more processes digitize,” said Dorsheimer. “However, until recently, this demand was manageable. The advent of large language models and first-mover incentives, as well as an ‘electrify everything’ approach to climate change, is weakening an increasingly fragile power grid. AI demand, which is forecast to increase electricity demand anywhere from 150 TWh to 500 TWh per year in 2030, representing an unprecedented 4%-12% growth of annual electricity demand.
“While technocrats will often argue that the ‘free’ input fuels for renewables such as solar or wind push marginal costs to near zero, making variable renewable power the cheapest option to meet new demand, our data concludes the exact opposite,” added Dorsheimer. “In fact, because of how our grid and our society is structured around dispatchable power on demand, penetration above 5% of renewables in the grid architecture quickly shifts from the least expensive to the most expensive generation asset. While battery storage helps, and will certainly be part of the solution, we conclude that the greatest near-term benefactor will be natural gas. Longer term, we conclude that advanced nuclear solutions not only must be part of the conversation, but also might be central to grid architecture.”
For exposure to AI power trends, Dorsheimer specifically pointed to GE Vernova’s natural gas generation assets and Tesla’s energy storage solutions. “We believe that natural gas is the pragmatic approach to increasing generation while managing the pressures of climate change,” Dorsheimer said. “We believe GE Vernova is best positioned to benefit as the energy sector reverts to pragmatism. For Tesla, we view Tesla Energy as the most underappreciated component of the story and expect the narrative will shift toward the energy storage business in light of tempered electric vehicle expectations in the near term. Combined with the auto business and longer-term opportunities like AI, robotaxi, and robotics, we see Tesla as a technology leader with an ‘Apple-esque’ ecosystem for the future of energy.”
On the solar energy companies, Dorsheimer said, “The solar markets represent a mixed bag of data crosscurrents. For example, the recent PJM auction suggests that utility-scale solar is likely to underperform expectations. Yet First Solar, which produces and sells thin-film solar modules, is sold out through 2026 and has visibility into 2030. While we believe First Solar is by far the best-positioned company in the solar supply chain, it remains to be seen if the recent PJM auction results are an anomaly or the start of a broader trend. In addition, residential and commercial solar has been under intense pressure in Europe and the United States because of the rising cost of capital and a weakening consumer. This narrative has been the focus for investors in both Enphase and SolarEdge.”
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