Morgan Stanley forecasts a $240 billion on-site generation market
Gains in power stocks including Bloom Energy draw attention
As the Democrats' advantage in the US midterm elections becomes clearer, memory chip stocks including Samsung Electronics and SK hynix are falling on concerns over artificial intelligence (AI) data center regulation. Meanwhile, demands that data centers directly bear the cost of procuring power have become a shared position of Democrats and Republicans, making on-site power companies such as Bloom Energy potential beneficiaries.
Samsung Electronics and SK hynix are trading lower on the South Korean stock market on November 4. This reflects expectations that an expansion of Democratic influence in Congress could lead to tighter restrictions on AI data center construction and big technology companies. Earlier, on November 2, local time, Micron Technology fell 5.8% in New York trading amid concerns about returns on AI infrastructure investment.
iM Securities said uncertainty could increase if the Democrats take control of both the Senate and the House of Representatives, noting that some Democratic lawmakers are calling for a pause in new data center construction because of rising electricity bills and pressure on power and water supplies. Hyundai Motor Securities also pointed out that construction delays could lead to lower demand for South Korean memory chips over the long term.
Notably, demands that companies bear power costs are not solely a Democratic agenda. President Trump's ratepayer protection pledge calls for companies to directly cover the costs of generation facilities and grid improvements. Vivek Ramaswamy, the Republican candidate for governor of Ohio, also called for a moratorium on data center construction and for companies to pay nearby residents' electricity bills.
Among 74 candidates in 36 gubernatorial elections, 43% supported construction bans or moratoriums, while 51% supported tighter regulation or conditional development. In a Reuters/Ipsos poll, 77% of respondents also expressed concern about increases in electricity bills caused by data centers.
In this environment, the market is turning its attention to companies that can reduce the burden on the existing grid. Energy publication Oilprice.com identified Bloom Energy and NextEra Energy as potential beneficiaries of a decisive Democratic victory. Bloom Energy's solid oxide fuel cells (SOFC) can be installed near data centers to supply electricity without a connection to the existing grid. At an Oracle data center in Utah, the company began supplying power in less than two months.
Expectations for the on-site generation market are also growing on Wall Street. In an October report, Morgan Stanley estimated that a US behind-the-meter (BTM) generation market worth about $240 billion would develop, based on approximately 77 GW of unmet data center power demand during 2026–2029 and 40 GW of demand from the commercial and industrial sectors.
Morgan Stanley ranked Bloom Energy first among on-site generation technologies based on the speed of securing power. BorgWarner's microturbines and FTAI Aviation's aircraft-engine-derived turbines ranked second and third, respectively. The bank maintained its $310 price target and overweight rating on Bloom Energy.
In an earlier September report, Morgan Stanley identified 19 GW of BTM turbines and engines and 6 GW of Bloom Energy fuel cells among the options for meeting a 57 GW power shortfall by 2028. GE Vernova is also being discussed as a potential beneficiary as gas turbines are identified as a major source of supply. Scotiabank described Vistra as a top unregulated power supplier positioned to meet AI electricity demand and set a $298 price target.
Share price performance also diverged. On November 3, local time, the day of the midterm elections, Bloom Energy surged 11.73%. The gain followed Barclays' upgrade of the stock to overweight and its $289 price target. FuelCell Energy rose 5% and GE Vernova gained 3% on the same day.
However, some analysts were cautious about the possibility of a slowdown in AI investment. Société Générale said AI investment trends were likely to continue because the Democrats would struggle to secure enough seats to override President Trump's veto and major federal agencies remained under Republican control. Kiwoom Securities also noted that the KOSPI has repeatedly recovered after US midterm elections.
An industry representative said, "There is an assessment that the key ultimately lies in who bears the cost of procuring power for AI data centers and how quickly power can be secured," adding, "As the principle that companies should bear power costs becomes more firmly established, the strategic value of on-site generation companies could increase."
Original Korean article: Financial News
English brief by Korea Wind Intelligence, koreawindintel.com
