NKT A/S: High-Voltage Cables Are The Future

2025-02-27 08:00:00 ET

Summary

• NKT A/S benefits from growing electricity consumption and aging European power grids, driving demand for high-voltage cables, crucial for AI servers and data centers.
• NKT's 2024 performance showed strong growth with revenues of EUR 3.3B and a significant order backlog of EUR 10.6B, ensuring future stability.
• Despite impressive growth, NKT's 2025 outlook is constrained, and we will need to understand in this article why it is so.

Introduction

While the AI revolution unfolds, we are striving to figure out what the next NVIDIA could be. We think about GPUs, servers, chips, LLMs, and similar. But I believe we are overlooking an almost obvious beneficiary of this turnaround. As data centers are built, we need more and more energy (by the way, we also need cleaner energy). So far, energy moves through cables, which make up our grids. This is why I have written that high-voltage cable manufacturers play the role of those selling shovels to the gold miners. I am personally invested in the industry leader Prysmian, ( OTCPK: PRYMF ), but the Danish NKT A/S ( NRKBF ) (NRKBY) is an interesting player in a market that is highly concentrated. A few months ago, we saw how this company was particularly strong in Nordic countries and was witnessing a significant order book build up which covered the next 5 to 7 years. Several tailwinds will benefit NKT: electricity consumption is growing, and Europe's power grid infrastructure is over 40 years old and needs to be replaced, leading to huge capex of at least EUR 35B per year through 2030....

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