Hidden Gems in the AI Boom – Power and Communication Infrastructure Might Be the Real Winners

While reading an article from the Korean Economic Daily, I discovered a truly intriguing perspective. Amidst the ongoing AI investment frenzy, everyone seems to be fixated on big tech companies like NVIDIA and Microsoft, yet the infrastructure companies essential for AI to function properly are relatively overlooked. It’s quite obvious when you think about it; AI services require enormous power, and real-time data exchange necessitates robust communication networks.

Particularly as of November 2025, data centers are rapidly proliferating across the United States, causing a surge in power demand. The annual average growth rate of power demand in the U.S. was only 0.7% in the 2000s and 0.6% in the 2010s, but last year it spiked by a staggering 2.8%. This figure alone illustrates the dramatic change.

Wall Street analysts appear to be catching onto this trend. For instance, Constellation Energy, the largest nuclear power company in the U.S., has seen four out of six investment banks that recently issued opinions raise their target prices since last month. The average target price is $413.6, suggesting a potential 23% increase compared to the closing price of $335.74 on November 13.

Nuclear Power Emerging as the Key Energy Source in the AI Era

What I found most fascinating is that big tech companies view nuclear power as the core energy source for data centers. With low carbon emissions and the ability to produce stable power regardless of season or climate, it’s ideal for AI data centers. Microsoft has indeed signed a 20-year power supply contract with the Three Mile Island nuclear plant for September 2024, and Amazon has purchased a data center in Pennsylvania that will directly receive power from a nuclear complex for $650 million in March 2024.

Wall Street forecasts that Constellation Energy’s operating profit next year will surge by 30.1% to $5.27 billion compared to this year. Vistra Energy, the second-largest player in the nuclear sector, is in a similar situation. Its net income growth rates over the past two years were 221.7% and 78.1%, respectively, showcasing an incredible growth trajectory.

Interestingly, these power companies have received relatively less attention on the New York Stock Exchange compared to big tech. Vistra Energy has risen 14.6% this year, with a 12-month forward price-to-earnings ratio (PER) of 18.6. Compared to big tech companies, it’s still undervalued. In fact, the average target price from 14 securities firms is $237.43, which is 38.4% higher than the closing price of $171.56 on November 13.

Regional power suppliers like American Electric Power and Exelon, as well as power equipment manufacturers like GE Vernova and Bloom Energy, are also gaining attention. Considering that power demand will continue to rise even after the AI boom subsides, these companies could become stable long-term investment destinations.

Communication Infrastructure as a Key Beneficiary in the AI Era

Equally important as power is communication infrastructure. For AI services to function properly, massive amounts of data must be exchanged in real-time. Especially as physical AI like autonomous vehicles and humanoid robots become mainstream, data traffic is bound to explode. According to Omdia, global mobile data traffic is expected to surge from 136EB (exabytes) per month in the first half of 2025 to 908EB by 2033. With 1EB equaling 1 billion GB, it’s an unimaginably vast scale.

A comment from an asset management firm representative was striking: “The existing communication infrastructure is insufficient to handle AI service traffic, and some equipment installed during the early 5G rollout is already facing replacement demand,” adding that “a surge in chip demand similar to what’s happening in the DRAM or HBM market could occur in the communication equipment market.” It’s a very convincing analysis.

Indeed, Nokia, the world’s second-largest telecommunications equipment company, is reporting strong performance. In the third quarter of 2025, its communication infrastructure segment grew by 11%, and its cloud and network services segment by 13%, thanks to the soaring demand from big tech and major cloud operators. Optical communication equipment companies like Ciena, based in Maryland, USA, and Lumentum Holdings, based in California, USA, are also classified as beneficiaries.

Moreover, the U.S.-China conflict is proving advantageous for American and European telecommunications equipment companies. The European Union (EU) is reportedly pushing legislation to remove Huawei and ZTE equipment from member states’ communication networks, providing an opportunity for Western companies like Nokia and Ericsson to expand their market share.

Implications and Investment Perspective in the Korean Market

From a Korean investor’s perspective, these global trends could also impact domestic related companies. Power-related companies like Korea Electric Power Corporation or KEPCO KPS, and telecom companies like KT or SK Telecom, could benefit from the increased demand for AI infrastructure. Especially since companies like Naver and Kakao are expanding AI data centers domestically, and foreign cloud companies are building data centers in Korea.

Personally, I believe these infrastructure companies could be the real beneficiaries of the AI boom. Semiconductor companies like NVIDIA or AMD have already seen significant stock price increases, and their valuations are at burdensome levels. In contrast, power and communication infrastructure companies are relatively undervalued, yet their demand is bound to increase as AI proliferates.

Of course, there are risks. If the AI investment fever cools, data center construction could slow down, which would curb the growth in power demand. Additionally, the telecommunications equipment market is highly competitive, which could result in low margins. However, in the long term, digital transformation and AI proliferation are unstoppable trends, so the outlook for these infrastructure companies seems bright.

As of the end of 2025, it appears that while AI investments initially focused on semiconductors and big tech, attention is now shifting to secondary beneficiaries. Power and communication infrastructure are precisely such fields. While investing, it’s crucial to carefully examine the financial status and competitiveness of individual companies, but the overall direction seems clear. As AI becomes more deeply integrated into our lives, the importance of the infrastructure supporting it will only grow.

This article was written after reading an article from the Korean Economic Daily and adding personal opinions and analysis.

Disclaimer: This blog is not a news outlet, and the content is the author’s personal opinion. The responsibility for investment decisions lies with the investor, and no responsibility is taken for investment losses based on the content of this article.