A research report indicates that the acceleration of generative AI model training and commercial deployment is driving exponential growth in global computing power demand. Leading North American technology companies have initiated a wave of ultra-large-scale AI data center (AIDC) construction. However, the U.S. power market faces multiple constraints on the supply side, leading to an increasingly prominent conflict between the rigid demand for computing power and the available electricity supply.

In the short term, mature power generation solutions are needed to quickly meet the immediate electricity demands of AIDCs, with gas turbines and reciprocating internal combustion engines being the core solutions. It is recommended to focus on the current mature power generation equipment sector and target companies involved in the manufacturing, core components, system integration, and operation and maintenance services for gas turbines and reciprocating engines.

The main viewpoints are as follows:

The structural power gap for North American AIDCs is worsening. Highly reliable, fast-responding, and deployable distributed power supply solutions are key to resolving the situation. The rapid advancement of generative AI is causing a sharp, rigid increase in electricity load in tech hubs like California, Texas, and Virginia, representing a core increment in power demand. Conversely, the U.S. power supply side is constrained by aging infrastructure, with 70% of transmission lines and transformers over 25 years old and 60% of circuit breakers over 30 years old. This results in insufficient regional transmission capacity and low flexibility for cross-regional dispatch. The release of grid power capacity lags behind demand growth, intensifying the supply-demand mismatch.

Different power generation technologies are suited to various usage scenarios based on their technical characteristics, cost-effectiveness, and commercial maturity. Short-term needs require mature solutions to match current AIDC demand, while mid-to-long-term prospects are opened by the continued development of efficient, energy-saving advanced technologies.

Short-term: Gas turbines and reciprocating internal combustion engines are the core solutions. Aeroderivative and industrial gas turbines, with their rapid start-stop capabilities and flexible deployment, meet immediate power supply and emergency peak-shaving needs. Heavy-duty gas turbines and their combined cycle systems, with advantages in high power and efficiency, are suitable for medium-to-large AIDC baseload requirements. Reciprocating engines deeply complement gas turbines, covering niches like small-to-medium AIDC power supply and ultimate backup power due to their quick start-up times and controllable costs.

Mid-to-long-term: Advanced power generation technologies such as Small Modular Reactors (SMRs), controlled nuclear fusion, and Solid Oxide Fuel Cells (SOFCs) offer core advantages including environmental friendliness, high energy density, long-term stable supply, and low operational costs. These characteristics align well with the long-term, stable power needs of AIDCs, making them ideal future technological directions. Major global tech firms are actively investing in these advanced technologies, with key milestones for commercial deployment anticipated around 2030.

There is strong confidence in the industrial investment opportunities presented by diversified power solutions for AIDCs. Two main investment themes are suggested:

First, focus on the current mature power generation equipment sector. Target companies involved in gas turbines and reciprocating engines, including those with final assembly capabilities and key players in the supply chain.

Second, take a forward-looking position in advanced power generation technology. Focus on companies engaged in the R&D and industrialization of SMR design and manufacturing, core equipment for nuclear fusion, and SOFC fuel cells.

Risks include potential delays in AIDC construction, substitution risks from alternative technological pathways, and slower-than-expected market expansion.