There is a lot happening in the markets right now, but three things stand out: business spending, rising demand for electricity, and the companies building the infrastructure to support it.
Business investment makes up about 14% of the economy, but it has accounted for roughly 48% of economic growth since the end of 2024. The five largest cloud and platform companies are expected to spend between $660 billion and $690 billion this year, up from about $380 billion last year.
All that spending is creating a new challenge: electricity. After nearly 20 years of flat power demand, U.S. electricity consumption is expected to hit a record this year. Utilities are planning roughly $1.4 trillion in investment through 2030 to keep up.
That brings us to the companies doing the building. Power transformers now have lead times of about 128 weeks. Demand has increased 119% since 2019, while prices are up 77%. At the same time, U.S. manufacturing has continued to expand.
So, what does it all mean? Spending is helping drive growth, electricity is becoming a key constraint, and the companies building the infrastructure are facing strong demand.
We do not think that means investors should simply chase the theme. It is another example of why we believe staying diversified and understanding what is driving the markets matters.
That is the story we are watching as we head into the fall.
Disclosures
This material is for informational purposes only and is not intended to provide investment, tax, or legal advice. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal. The information presented is believed to be reliable but is not guaranteed to be complete or accurate. Please consult your financial, tax, or legal professional regarding your specific circumstances.