One of my favorite and potentially most lucrative megatrends of the next decade - The Electrification of Everything - just got another major tailwind.
President Trump recently invoked the Defense Production Act to expand domestic production of critical grid equipment - including transformers, high-voltage transmission components, substations, power electronics, and advanced conductors. In plain English: Washington is finally admitting the U.S. power grid has a hardware problem.
And at the center of that problem are transformers.
These are not exciting pieces of technology. They do not get AI headlines. Nobody is making viral videos about them.
But without transformers, nothing gets powered — not the data center, not the EV charging station, not the new factory, not the home, not the AI economy.
That is why this matters so much. Transformer backlogs are still running a year or more, roughly twice historical lead times, according to the National Electrical Manufacturers Association.
The Bottleneck Is No Longer Demand — It's Delivery
This is exactly what I mean when I talk about the “Electrification of Everything.”
We have more electricity demand coming from AI data centers, reshoring, electric vehicles, industrial automation, air conditioning, and grid modernization. But the system built to move that electricity was not designed for this level of growth.
And consumers are already feeling it.
Average U.S. electricity prices rose 9% year over year in February. Residential prices were up 7.4%. In some key growth states, the increases were much bigger - Virginia rose 26.3%, Ohio 21.9%, and my home state of Pennsylvania jumped 19.5%.
Source: EIA
That is not a small move… That is a warning sign.
Electricity Is Becoming a Scarce Resource
When something becomes scarce and valuable, capital flows toward the companies that can solve the shortage.
We are also seeing this show up in grid reliability.
New York’s grid operator just warned that reliability margins this summer will be the lowest in recent history. Under baseline conditions, New York is expected to have just 417 megawatts of reliability margin. During a three-day heat wave with average daily temperatures of 95 degrees, that margin could fall to negative 1,679 megawatts without emergency actions.
That is how tight the system has become.
And then there is AI.
Data centers have been one of the strongest pockets of construction demand. But now even that boom is running into a wall: access to power.
Developers are finding that land, fiber, and capital are not enough. If the utility cannot commit to a firm power delivery timeline, the project stalls. Long-lead electrical equipment - especially switchgear, transformers, and generators - is holding back projects before they even break ground.
The AI Boom Meets the Real World
That is the opportunity. The winners of this next phase will not only be the companies building AI chips or software — they will also be the companies building the physical backbone of the electric economy: transformers, switchgear, substations, advanced conductors, grid automation, power distribution, and electrical equipment.
This is where the AI boom meets the real world.
The Defense Production Act will not fix the transformer shortage overnight. Funding, execution, permitting, and manufacturing capacity all matter.
But the signal is clear: grid equipment is now being treated as a national priority.
That is a major shift.
For investors, it confirms what we have been saying for a long time: the electrification trend is not slowing down. It is expanding. It is spreading across the economy. And it is creating opportunities in some of the most overlooked corners of the market.
The AI age will not be powered by hype.
It will be powered by transformers, substations, wires, and the companies that can deliver electricity when everyone else is waiting in line.
Five Companies at the Center of This Shift
No power means no growth — it's that simple. And the companies solving that problem are about to become some of the most important and most valuable businesses in the market. Here are five of the biggest players already sitting at the center of this shift:
GE Vernova $GEV ( ▼ 3.01% ) — One of the largest U.S.-based grid infrastructure companies, with major exposure to transformers, substations, and transmission equipment. This is a direct way to play the modernization of the American grid.
Siemens Energy $SMERY ( ▲ 0.43% ) — A global powerhouse in high-voltage transformers and transmission systems, aggressively expanding capacity to meet surging demand from utilities and data centers.
Hitachi $HTHIY ( ▲ 0.8% ) — Through its Hitachi Energy division, this is arguably the most direct global leader in transformers, especially in ultra-high voltage systems critical for large-scale power transmission.
Eaton $ETN ( ▼ 1.06% ) — A dominant player in electrical distribution equipment, switchgear, and transformers, with deep exposure to data centers, industrial buildouts, and electrification trends.
ABB $ABBNY ( ▲ 0.03% ) — A global leader in grid automation, electrification, and transformer technology, giving investors broad exposure to the entire power infrastructure ecosystem.
These are not speculative startups — they are the backbone of the global electrical system, and they are all seeing demand surge at the same time supply remains constrained.
That's the setup.
Because when the world runs short on power, the companies that control the flow of electricity don't just participate in the trend. They become the trend.
Here’s to the future,
Matt McCall
Founder, NXT Wave Research
