Shenwan Hongyuan Group: Increasing demand for AI computing power exacerbates power supply gap, opening up growth opportunities in the gas engine market.

Shenwan Hongyuan Group released a research report, stating that the training and commercialization of generative AI large models are accelerating, leading to an exponential growth in global computing power demand. Top technology companies in North America are initiating a wave of large-scale AI data centers (AIDC) construction. However, the US electricity market is facing multiple constraints on the supply side, with a continuing contradiction between the demand for computing power and the supply of electricity. In the short term, mature power generation solutions are needed to quickly match the current stage demand for electricity from AIDC, with gas turbines and reciprocating internal combustion engines as core solutions. The suggestion is to focus on mature power generation equipment and invest in the manufacture, core components, system integration, and operation and maintenance services of gas turbines and reciprocating internal combustion engines. Shenwan Hongyuan Group's main points are as follows: -The structural power gap in North American AIDC is intensifying, and high reliability, fast response, and distributed deployment of power supply solutions are the key to breaking the deadlock. -The training and commercialization of generative AI large models are accelerating, leading to an exponential growth in global computing power demand. Top technology companies in North America are initiating a wave of large-scale AIDC construction. California, Texas, Virginia, and other technology industry clusters are experiencing a rapid increase in electricity demand, becoming the core increment of power demand. However, the US electricity market is facing multiple constraints on the supply side, with aging electricity grid infrastructure, insufficient transmission capacity, low flexibility in inter-regional dispatch, and a lag in power supply capacity relative to demand growth. -Different power generation technology routes are adapted to different stages of electricity use scenarios based on technological characteristics, usage scenarios, cost-effectiveness, and commercialization degree. -In the short term, mature power generation solutions need to be quickly matched with the current stage demand for electricity from AIDC, while in the medium and long term, the continuous development of efficient and energy-saving advanced technologies opens up long-term opportunities. -Short term: Gas turbines and reciprocating internal combustion engines are core solutions. Modified aviation gas turbines and industrial gas turbines with rapid start-stop and flexible deployment characteristics match immediate power supply and emergency peak demand. Heavy-duty gas turbines and co-generation systems with high power and efficiency advantages are suitable for medium-term large-scale AIDC base load power supply demands. Reciprocating internal combustion engines complement gas turbines deeply, covering small and medium-sized AIDC power supply, extreme backup power, and other segmented scenarios. -Medium and long term: Advanced power generation technologies such as Small Modular Reactors (SMR), controlled nuclear fusion, and Solid Oxide Fuel Cells (SOFC) have core advantages such as environmental friendliness, high energy density, long-term stable energy supply, and low operation and maintenance costs. They also highly match the long-term stable power supply demands of AIDC and are the ideal development direction for AIDC power supply. Global technology giants such as Microsoft, Google, Amazon, and Meta are also continuously investing in cutting-edge power generation technologies, with the potential for commercialization by 2030. -The industry investment opportunities empowering AIDC power supply are optimistic about diversified power generation solutions, focusing on two main lines of related investments: 1. focus on mature power generation equipment, invest in the manufacture, core components, system integration, and operation and maintenance services of gas turbines and reciprocating internal combustion engines, with companies such as AECC Aviation Power (600893.SH), China Shipbuilding Industry Group Power (600482.SH), and Dongfang Electric Corporation (600875.SH) having assembly capabilities. Core links in the industry chain include Anhui Yingliu Electromechanical (603308.SZ), Wedge Industrial (000534.SZ), Guizhou Aviation Technical Development (688239.SH), Jiangsu Longda Superalloy (688231.SH), among others. 2. forward-looking layout in the field of cutting-edge power generation technologies, focusing on SMR nuclear reactor design and manufacturing, core equipment for nuclear fusion, technical research and development, and industrialization of SOFC fuel cells, with companies such as Hefei Metalforming Intelligent Manufacturing (603011.SH), Jiangxi Lian Chuang Optoelectronic Science And Technology (600363.SH), Western Superconducting Technologies (688122.SH), etc. -Risk warning: AIDC construction progress falls short of expectations, technological route substitution risks, market expansion falling short of expectations.