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From left: SK Group Chairman Chey Tae-won, President Lee Jae-myung, and Samsung Electronics Chairman Lee Jae-yong join hands after companies announced their investment plans at the "3 Mega-Projects" national briefing session held at the presidential office on June 29. / Yonhap

Shares of power infrastructure-related companies are surging on the Korean stock market, rapidly drawing in investor money. With semiconductor stocks — the long-standing driver of the market rally — taking a short breather, power stocks have emerged as the core pillar of the "AI supercycle." Securities firms are pointing to domestic power stocks as the biggest beneficiaries of both expanding power infrastructure investment by global big tech firms and the new AI data centers included in the government's "3 Mega-Projects" plan, and have been raising their earnings estimates across the board.

According to the Korea Exchange on the 6th, power-related ETFs led the pack over the past week (July 30 - August 5), with returns exceeding 35% among domestically listed ETFs excluding leveraged and inverse products, accounting for 8 of the top 10 performers.

Among them, Korea Investment Trust Management's "ACE Korea AI Power TOP10" posted the highest return at 36.12%. It was followed by Samsung Asset Management's "KODEX AI Power Core Equipment" (35.47%) and NH-Amundi Asset Management's "HANARO Power Equipment Investment" (35.19%), among others in the top rankings.

Securities firms point to U.S. company Palantir's earnings surprise, reported on the 3rd (local time), as the spark for this power stock rally. Palantir posted results that beat market expectations, including a 149% jump in second-quarter U.S. commercial revenue and an operating margin of 47%. Its stock surged nearly 30% in a single day, with the results seen as having swept away lingering market concerns over AI overinvestment and profitability uncertainty in one stroke.

This shifted investor attention toward "power infrastructure," a core element of the AI industry. Securities firms are increasingly suggesting that as the bottleneck in AI development shifts from chip (GPU) supply to power grid capacity, power equipment could take on the status of "the next semiconductor" in the market.

Indeed, power investment by global big tech companies is surging. This is aimed at resolving the bottleneck of being unable to supply power in time due to aging grids and delayed grid connections. AI leaders such as Oracle are going all-out to secure power, even building their own power generation facilities or footing the bill for new transmission line construction.

As a result, power equipment makers' pricing power has strengthened, and Korea's three major power equipment companies — HD Hyundai Electric, LS Electric, and Hyosung Heavy Industries — have raised their average new order targets for this year by 42%. With major power companies having already raised unit prices in the first half and signaling further price hikes in the second half, earnings per share (EPS) estimates are also rising quickly.

The government's "3 Mega-Projects" initiative has also proven a major boon for the power industry. The domestic power capacity needed for the project — centered on building new semiconductor fabs and AI data centers — is estimated at 39.7 GW, an enormous amount that would require simultaneously running more than 28 of Korea's large nuclear reactors (1.4 GW class) to produce. As securities firms raise earnings estimates across the power value chain — including large transformers, cables, and energy storage systems (ESS) — the entire power sector is increasingly seen as having entered an "AI-driven supercycle."

Sung Jong-hwa, a researcher at LS Securities, said this boom is not a short-term cycle but an extremely long-term structural growth phase driven by the convergence of the energy transition and the AI revolution, adding that with the sector riding structural growth trends like AI, data centers, and decarbonization, it should offer sufficient investment appeal over the medium to long term.

                                                                                                           Han Hye-seong