Each day roundup of analysis and evaluation from The Globe and Mail’s market strategist Scott Barlow
Morgan Stanley analyst Andrew Percoco believes synthetic intelligence (AI)-related knowledge centre progress will create revenue enlargement for particular energy turbines,
“MS Analysis Analyst Andrew Percoco believes that there’s a vital mismatch between the speedy progress of GenAI energy wants (however continued effectivity enhancements) and the gradual progress in energy grid infrastructure. Moreover, Andrew highlights that given the massive quantity of capital deployed on these new, very massive knowledge facilities, and given the speedy tempo of GenAI chip innovation, there may be super worth for knowledge heart house owners to hook up with an influence supply as rapidly as attainable. Consequently, Andrew believes that knowledge facilities will more and more resort to onsite energy technology to resolve for this “time-to-power” constraint, because it’s changing into generally recognized within the business, which opens up a big progress TAM [total addressable market] for distributed energy suppliers. Andrew estimates a 17 GW knowledge heart TAM for on-site energy options by 2027 (4.3 GW yearly). He notes that strong oxide gas cells are uniquely positioned to serve this market and Bloom Power Corp. BE-N is his favourite option to play this theme. Andrew factors out that BE presently deploys 300 MW yearly (15% to knowledge facilities). At simply 5% market share of his 4.3 GW annual TAM, Andrew may see vital upside to his estimates. Andrew notes that 15 per cent of Bloom’s annual income is already sourced from knowledge heart clients, nevertheless, he expects the corporate to announce at the very least one knowledge heart deal this 12 months, which Andrew expects would function a big constructive catalyst for the inventory. BE is presently buying and selling at 17.5 occasions/10.3 occasions Andrew’s 2025/2026 adj. EBITDA estimate, which in his view vastly undervalues the expansion and margin enchancment alternative that Andrew expects to materialize for the corporate”
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Strategists at RBC Capital Markets have adjustments to their international sector weighting suggestions,
“4 huge issues that you must know: First, optimism on efficiency persists for many sectors and protection areas, regardless of the challenges related to increased rates of interest. Second, our U.S. & UK election state of affairs evaluation suggests politics matter to sure sectors and industries, however that we shouldn’t view these occasions as the primary drivers of fairness markets in coming months. Third, throughout the U.S. (and S&P 500 particularly) we’re upgrading Supplies to obese, downgrading Well being Care to market weight, and downgrading REITs to underweight. Fourth, exterior of the US, efficiency outlooks in our survey are most constructive in Canada and Europe and least constructive in Australia … Throughout all 4 of the core outlook questions that we requested [RBC analysts], Power has the very best common rating on the international degree, pushed by probably the most favorable evaluation of demand … Regionally, valuations are seen as higher in Europe and Canada than the US or Australia. On the sector degree, valuations have been seen as most tasty on the international degree for Supplies, Utilities, and Financials, and least compelling for Shopper Staples”
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Citi strategist Max Layton sees extra upside for copper, pushed by speculative positioning,
“We spotlight that pure-play copper equities, that are lengthy length belongings whose costs don’t converge to a bodily market like commodities, have moved as much as worth $10.5k-12.5k/t copper into perpetuity, suggesting that there’s additional room for ahead wanting buyers to take the commodity worth increased … The potential scale of enhance in web speculative copper positioning as soon as developed market progress bottoms and cyclical demand sentiment turns would dwarf the bodily market balances and drive costs past $12k/t. In our base case this peaks by late-2025/early 2026 … Our base case sees a cyclical demand rebound by 2025/2026 (after three years of contraction) driving complete copper demand progress effectively above pattern when compounded with decarbonisation-related consumption progress. Al-driven datacentre demand progress over the subsequent few years is an extra upside kicker, however is troublesome to precisely quantify. Our bull case for demand assumes no contraction in cyclical copper demand progress in 2024 and a extra aggressive medium time period path for EV penetration charges and renewables build-out aligned with the COP 28 purpose to triple international renewable by 2030. This could drive complete copper demand progress effectively above pattern”
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Diversion: “Weight Loss Drug Customers Are Giving Up Their Vices” – Gizmodo
