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The bottleneck behind the bottlenecks

Midwestern Investor · The Midwestern Investor · June 15, 2026 at 00:52 · ⏱ 13 min read  | Read on Substack ↗
Summary
The article argues that while optics and memory are widely recognized bottlenecks in AI infrastructure, the ultimate constraint is the electrical power grid, particularly high-power transformers with lead times stretching into the 2030s. The author favors power/grid stocks over optics/memory names because less growth is priced in and demand will persist for years, making power supply the 'final boss' of AI bottlenecks.
  • Co-packaged optics (CPO) could reduce power consumption by 73% per SemiAnalysis, but production is delayed to 2028/2029.
  • High-power transformer lead times have worsened from 24–30 months to 4–5 years, with demand up 270% since 2019.
  • Nvidia CEO Jensen Huang said networking one million GPUs with pluggable optics would draw 180 MW just for connections.
  • SK Hynix and Micron HBM is sold out for all of 2026, but Micron's $100B Megafab and other expansions aim to catch up.
  • Google is planning a large data center campus in Hermantown, MN, deliberately sited near existing high-power transformers.
  • Bloomberg reports U.S. data center expansion is constrained by electrical hardware, not chips, servers, or funding.
  • Siemens Energy's $1B transformer capacity investment barely makes a dent in the backlog.
Read time 13 min
Length 13,328 chars
Category finance
Ideas
Minnvestor Tech/Semiconductor growth investor
Author believes Nvidia is central to AI infrastructure and that the ultimate bottleneck is power/grid, not optics or memory; holding Nvidia as part of a diversified AI bet.
Minnvestor Tech/Semiconductor growth investor
Author highlights Google's massive data center campus in Hermantown, MN, tying to the power grid theme; holding Google as a hyperscaler beneficiary.
Minnvestor Tech/Semiconductor growth investor
Author acknowledges optics are a well-known bottleneck but holds Lumentum as part of a portfolio that also bets on power/grid, not as a pure optics play.
Minnvestor Tech/Semiconductor growth investor
Author explicitly favors nVent over larger thermal player Vertiv, citing upside potential from growing demand for electrical connections, protection, and thermal equipment in data centers.
Minnvestor Tech/Semiconductor growth investor
Forgent Power Solutions is a Minnesota-based grid equipment company; author holds it as part of the power/grid bottleneck theme that he believes has less forward growth priced in.
Minnvestor Tech/Semiconductor growth investor
Ormat is a geothermal energy company that signed a major deal with Google; author includes it as part of the 'always on' power generation theme tied to AI data center demand.
Minnvestor Tech/Semiconductor growth investor
CECO Environmental focuses on upstream ventilation and exhaust equipment for thermal management; author sees demand from data center heat dissipation needs.
Minnvestor Tech/Semiconductor growth investor
Article notes that Meta measured a Broadcom CPO version using roughly a third of the power of a pluggable. This validates Broadcom's optical/CPO roadmap and positions it as a key supplier for energy-e
Article notes that Meta measured a Broadcom CPO version using roughly a third of the power of a pluggable. This validates Broadcom's optical/CPO roadmap and positions it as a key supplier for energy-efficient networking. Risk: CPO adoption timeline uncertain; Broadcom's CPO may face competition from Nvidia's Q3450.
Minnvestor Tech/Semiconductor growth investor
Article states Micron's HBM is sold out for 2026 and that the company is expanding capacity with a $100B Megafab. This confirms MU as a key memory bottleneck beneficiary in the short-to-medium term.
Article states Micron's HBM is sold out for 2026 and that the company is expanding capacity with a $100B Megafab. This confirms MU as a key memory bottleneck beneficiary in the short-to-medium term. Risk: Memory cycles are historically volatile; once supply catches up, pricing could collapse.
Minnvestor Tech/Semiconductor growth investor
Hammond Power Solutions is a Canadian power distribution company; author includes it as a play on the power grid transformation theme.
Minnvestor Tech/Semiconductor growth investor
Author names Vertiv as the biggest name in thermal equipment and describes growing demand for cooling from data centers. While he prefers nVent, Vertiv is a direct beneficiary of the same power/heat b
Author names Vertiv as the biggest name in thermal equipment and describes growing demand for cooling from data centers. While he prefers nVent, Vertiv is a direct beneficiary of the same power/heat bottleneck thesis. Risk: Vertiv already has significant growth priced in; competition or margin compression could limit upside.
Minnvestor Tech/Semiconductor growth investor
Author lists GE Vernova under 'Power delivery like GE Vernova in large transformers.' With transformer lead times at 4–5 years and demand surging, GEV is a direct beneficiary of grid infrastructure sp
Author lists GE Vernova under 'Power delivery like GE Vernova in large transformers.' With transformer lead times at 4–5 years and demand surging, GEV is a direct beneficiary of grid infrastructure spending. Risk: Execution risk on large-scale transformer production; competition from Siemens Energy and others.
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