Hidden Beneficiaries of the AI Era: Surging Data Center Power Demand and the Structural Earnings Rally of Power Cable Stocks
As AI data center expansion converges with the replacement of aging global power grids, Korean power cable stocks are achieving record orders and earnings. We analyze the current state and investment outlook of the power infrastructure industry, which has entered a structural growth phase beyond a simple theme.
Power Grid Supercycle Driven by AI Industry Expansion
The explosive growth of the artificial intelligence (AI) industry is breathing strong tailwinds into the power cable and electrical equipment sector. As the expansion of AI data centers for massive computational processing becomes an essential mandate, an enormous demand for power infrastructure is being generated to support them. Market experts diagnose the current expansion in power grid investments not as a short-term phenomenon, but as the early stage of a structural, long-term 'supercycle'.
Data Centers and Massive Power Consumption
The training and inference processes of AI models consume exponentially more power than traditional cloud servers. In particular, AI servers densely packed with advanced GPUs and the sophisticated cooling systems required to chill them cannot operate normally without a stable, large-scale power supply. As of 2026, the hyperscale data centers being competitively built by global Big Tech companies prioritize securing power efficiency and expanding power transmission and distribution networks. Consequently, the demand for extra-high voltage cables, transformers, and power distribution systems is surging.
Convergence with Global Aging Grid Replacement Demand
Furthermore, the arrival of the replacement cycle for aging power grids in developed countries, including the United States, is accelerating market expansion. To handle the additional power demand from new AI data center construction, upgrading the existing transmission networks is indispensable. As a result, new demand (AI infrastructure) and replacement demand (aging power grids) are erupting simultaneously, leading to a worldwide shortage in power cable supply.
Differentiated Earnings of Major Korean Power Cable Companies
Riding the wave of the global power infrastructure boom, major Korean power cable companies are achieving record-breaking earnings based on remarkable order performances in core markets such as North America.
Portfolio Realignment Centered on High-Value-Added Products
Korean power cable manufacturers, which previously suffered from low-price bidding competition, have now successfully transitioned their portfolios to focus on high-value-added products, such as extra-high voltage and submarine cables, as well as busducts, which are essential for power distribution within data centers. This fundamental improvement has led not only to top-line growth but also to a steep rise in operating profit margins, demonstrating a clear enhancement in their fundamentals.
- Taihan Cable & Solution: Riding on large-scale order expansions in North American power grid projects and the submarine cable sector, it is recording unprecedented operating profits and is being re-evaluated by the market.
- Gaon Cable: Deeply benefiting from US AI data center and solar power grid investments, it continues to grow its top line, notably securing long-term supply contracts with major US Big Tech companies.
- LS Cable & System: Leveraging its overwhelming competitiveness in the highly technical HVDC (High Voltage Direct Current) cable sector, it is successively winning major global projects.
Future Outlook and Risk Factors in Power Cable Investments
The stock prices of major power cable companies and the 'Big 3' electrical equipment manufacturers (Hyosung Heavy Industries, HD Hyundai Electric, LS Electric) are staging strong rallies backed by solid earnings. Given that their order backlogs are piled up for several years, their earnings visibility is also evaluated as very high.
Structural Growth, Not a Short-Term Theme
The notable point is that this rally in power cable stocks is not a temporary phenomenon merely riding the 'AI theme'. Global power grid upgrades and AI data center construction are long-term megatrends expected to last for the next 5 to 10 years. This serves as a structural growth foundation guaranteeing stable, long-term cash generation for power cable companies.
Monitoring Raw Material Price Volatility
However, there are variables to consider when investing. The primary factor is the volatility in the price of copper, which accounts for the absolute majority of power cable manufacturing costs. An increase in copper prices can lead to short-term product price hikes (via escalation clauses), resulting in revenue expansion effects. Yet, excessive price spikes could trigger a contraction in global demand or a shift to substitutes like aluminum. Therefore, a strategy of continuously monitoring changes in the macro environment and copper price trends while selecting companies based on their order competitiveness is required.