How Costly is it to Pivot from the Middle East for Supply?: Americas Sustainability - What Does it Cost to Pivot from ME Reliance? A Japan, South Korea & Taiwan Case Study

Research evidence excerpt

How Costly is it to Pivot from the Middle East for Supply?: Americas Sustainability - What Does it Cost to Pivot from ME Reliance? A Japan, South Korea & Taiwan Case Study

who has secured power, who has grid access, who can deliver cooling, who can finance

infrastructure and who can translate backlog into earnings. (Full Report)

From our Decarb Ideas List, the most directly aligned beneficiaries are the power

and utility names with visible load growth and differentiated large-load

frameworks, including NRG, DTE, NI, CEG, VST, PCG and ETR, alongside the grid,

cooling, construction and electrification stack, including PWR, FLR, J, SHLS and

NXT.

Separately, Physical AI continues to migrate from “flashy theme” to earnings

topic, but the evidence is still strongest in automation infrastructure, edge

compute, sensors, controls, imaging, connectivity and workflow software. From

our Physical AI Ideas List, that continues to pull in JCI, HON, EMR, TER, TDY, CGNX,

ADI, ALGM, APH and TEL, while data-center-adjacent infrastructure exposure

remains relevant for MOD, NVT, GLW and broader hyperscaler ecosystem

beneficiaries

US Equity Strategy - Market outlook: higher growth not priced

AI demand is still inflecting higher with today’s AI cycle only 2yrs in, versus Tech cycles

that lasted 10 years at ~20% annual real growth. Compute capability is compounding

exponentially, cloud backlogs have surged, and enterprise AI spend is ramping. Capex is

broadening as companies have both need and capacity to spend: corporate net cash

flow to GDP surged ~3pp, ex-hyperscaler FCF is up >$200bn, capex ex-hyperscalers is

low relative to OCF, and equipment ex-IT/structures spend is just above recession levels.

Orders and breadth confirm the broadening, with capital goods orders up ~10% y/y,