Semiconductors remain essential to AI, but expectations and valuations are already high, while rapid technology cycles create competitive risk. Power-generation equipment should also benefit, but demand can be more dependent on individual projects and capacity additions.

Grid infrastructure looks like a broader bottleneck. AI data centres require enormous amounts of reliable electricity, and that means more substations, transmission lines, transformers and grid connections. Importantly, these investments can benefit not only AI but also electrification and general growth in power demand.

Companies such as Quanta Services therefore interest me as a “picks and shovels” approach to the AI build-out. I would still watch order backlogs, margins and free cash flow closely. The AI theme may attract investors, but ultimately sustained earnings growth has to justify the valuation.