Nasdaq stalls, but power stocks keep hitting new highs? The second half of AI, an in-depth analysis of the 2026 U.S. stock grid modernization investment landscape

By 2026, the U.S. stock market presents an extreme divide: the Nasdaq has failed to reach a new high for four consecutive months, with AI industry leaders’ valuations suffering in the wait for a new round of rate cuts; meanwhile, on the other side of the market, industrial, energy, and utility stocks are breaking through amidst the roar of the “Old World.”

This divide sends a clear signal: competition in AI has shifted from algorithm battles to a fight over physical resources. If 2024 is the “Year of Chips,” then 2026 is the “Year of Power Grid Modernization.”

Currently, the revaluation of power assets is unstoppable. In 2023-2024, the market is buying into the “brain” (chips), and in 2025-2026, capital is flowing into the “heart and vessels” (electricity and power grids).

This article will provide investors with a comprehensive review of the structural changes, competitive landscape, and opportunities within the U.S. power grid industry.

RockFlow’s research team believes investors should focus on three levels: the high-margin software automation layer represented by GEV, the high-certainty equipment manufacturing layer centered around Eaton and Schneider, and the infrastructure dividend beneficiaries led by PWR.

1. AI Demand Shock and the “Aging” of the U.S. Power Grid

Over the past few decades, Americans have almost forgotten what “power shortage” means. In the early 21st century, thanks to the widespread adoption of LED lighting and the mandatory implementation of EPA’s Energy Star certification, despite population growth, energy consumption in the U.S. has remarkably stabilized.

However, this stagnation was completely broken in 2025. With exponential growth in large-scale data centers and AI applications, energy demand has experienced a nearly vertical inflection point:

Doubling consumption: By 2026, global data center electricity use is expected to reach 1,000-1,050 TWh, more than double the 2022 level.

Urban scale: By the end of 2026, the power demand of a single data center campus will surpass 2 GW, equivalent to the power load of a medium-sized city.

Structural share: In 2023, data centers accounted for only 4.4% of U.S. electricity consumption; by 2028, this is expected to soar to 12%.

Besides AI, the manufacturing resurgence and societal electrification (EVs, heat pumps, etc.) are also driving up loads simultaneously. The power industry is shifting from a “zero-growth” dull sector to a new phase of rapid expansion.

In stark contrast, the U.S. power grid suffers from “aging.”

The current U.S. grid was not designed for the AI era. It resembles a patchwork of mid-20th-century technology.

The grid mainly consists of generation, transmission, and distribution. Current issues include:

Aging infrastructure: As of 2023, 70% of lines and transformers have been in service for over 25 years. Most of the grid was built in the 1960s and 1970s, approaching the 50-80 year design lifespan.

Climate change “last straw”: In the first half of 2025, dozens of weather disasters caused billions of dollars in damages. High temperatures causing line sag and hurricanes leading to grid failures are becoming normal causes of regional blackouts.

On the other hand, there is a desperate “queue crisis”: nearly 2,600 GW of energy and storage capacity (almost twice the current grid size) are waiting to connect to the grid.

Delivery times for large transformers have extended to 2.5 years. In the 2026/27 delivery year, PJM interconnection clients will pay an extra $3.5 billion in capacity costs due to grid connection bottlenecks.

2. Redefining the Smart Grid

The so-called grid modernization is not just about adding more wires but transforming the traditional unidirectional analog network into a bidirectional, real-time, intelligent digital network.

Neural endpoints: Advanced Metering Infrastructure (AMI)

AMIs are the first step in modernization. They turn one-way power supply into two-way data exchange. The core is smart meters that transmit data back via RF or cellular networks.

By 2025, the global smart meter market is valued at approximately $30.9 billion, expected to approach $50 billion by 2030.

Immune system: Automation and self-healing networks (FLISR)

This shift takes infrastructure from passive to active. Using software developed by companies like GE Vernova, upgraded power systems can:

1. Detect automatically: precisely locate fallen trees or transformer explosions.

2. Isolate automatically: instantly disconnect faulty lines.

3. Recover automatically: reroute power from neighboring feeders to restore service, achieving “self-healing.”

Energy democratization: Virtual Power Plants (VPP)

VPPs use cloud software to aggregate residential solar, EV batteries, and other distributed energy resources. Consumers become “prosumers,” selling excess power back to the grid when under stress.

Although the market size is only a few hundred billion dollars, its strategic importance in peak shaving and load balancing is significant.

3. Who Is Sharing This Massive Cake?

Based on the current industry attributes and profit structure of the U.S. power grid, RockFlow’s research team divides benefiting companies into four tiers:

Software and automation: the “brain” of the grid

This segment has the highest profit margins and moat.

GE Vernova (GEV): coordinates the entire energy lifecycle via GridOS platform. As a spin-off from GE, it is the undisputed leader in grid digitalization.

Siemens (SIEGY): with its leading Spectrum Power system, its latest Gridscale X platform is setting the standard for distribution digitization.

Itron (ITRI): king of smart metering. Its “edge intelligence” products can detect outages in real-time without central processing, acting as guardians at the distribution end.

Equipment manufacturing and power electronics: essential foundation

Eaton (ETN): a giant in distribution equipment, covering nearly all physical nodes of grid modernization from circuit breakers to transformers.

ABB: global leader in high-voltage products and automation. Its record backlog is mainly driven by grid modernization projects.

Schneider Electric (SBGSY): focused on smart grid and microgrid solutions, providing end-to-end energy management. Its EcoStruxure platform deeply integrates hardware and digital management, dominating in data centers and microgrids.

Engineering, Procurement, and Construction (EPC): builders

Quanta Services (PWR): North America’s leader in transmission and distribution contracting. Its recent $72 billion agreement with AEP exemplifies the grid upgrade trend.

MasTec (MTZ): focused on renewable energy interconnection. Its $17 billion backlog indicates explosive growth in the next two years.

Regulated utilities: the established “managers”

NextEra Energy (NEE): the largest clean energy company in the U.S., focusing on wind and solar power, with extensive renewable assets and long-term PPAs with major clients, ensuring stable revenue.

Duke Energy (DUK): with extensive grid infrastructure across multiple data center clusters. Its modernization efforts enable efficient, low-loss power delivery. DUK is also investing in clean energy generation to meet data centers’ green power needs.

Conclusion: The “revaluation” of power assets has begun

By 2026, the power grid will no longer be the forgotten “public utility” but a core asset related to national security and AI dominance.

RockFlow’s research team believes that software-driven automation companies (GEV, ITRI) will command the highest premiums; equipment manufacturers (ETN, ABB) will have the most certain order visibility; and EPC giants (PWR) will be the direct beneficiaries of infrastructure dividends.

In the next five years, the alpha in U.S. stocks will no longer only exist in code but in the roaring sound of every smart transformer.