Behind-the-meter power stocks slide 7% as AI capex doubts mount

Behind-the-meter power stocks tumbled Tuesday, FTAI Aviation down 7 percent and GE Vernova off 6 percent, after a Wall Street Journal report flagged $3 trillion in off-balance-sheet AI commitments. Caterpillar fell 4 percent, while Bloom Energy dropped 10 percent and Vertiv lost 7 percent as the entire complex sold off in unison.

"No one is slowing down at the moment. In fact, if we can get more units out, they're asking us to give them more units," Joe Creed, chief executive of Caterpillar, said after the company posted its first $20 billion quarter with Power Generation growth of 72 percent on data center demand.

The trigger was a coordinated de-risking out of AI-levered industrials after the Wall Street Journal analysis of SEC filings showed nine top tech companies held some $3 trillion of off-balance-sheet commitments mostly related to AI, growing faster than traditional capex of about $600 billion. Weekend model-maker disclosures also underwhelmed, with Anthropic reporting annualized revenue of $65 billion at the end of July and OpenAI saying its ARR recently hit $40 billion — big numbers, but softer than venture-circle whispers. Rates piled on: the 30-year Treasury hit a 19-year high and the 10-year sits at 4.68 percent, compressing the present value of long-duration backlogs.

The S&P 500 fell 0.55 percent to 7,707.80, the Dow slipped 0.15 percent to 53,382.40, and the Nasdaq 100 dropped 1.53 percent to 29,543.30. Rotation flows favored healthcare, consumer defensive, utilities, and energy, while technology led to the downside. Breadth told the story: Solaris Energy Infrastructure fell 4 percent despite entering the day up 13 percent on the week, and Vertiv dropped 7 percent after running 8 percent higher last week. Overseas, the Nikkei 225 fell 3.82 percent to 66,346.20.

Fundamentals remain strong. GE Vernova exited Q2 with a $176 billion backlog, signed 20 gigawatts of new gas orders in the quarter, and raised full-year revenue guidance to $45.5 billion to $46.5 billion. Caterpillar's total backlog reached $72 billion. FTAI, the day's biggest large-cap decliner, sits at a trailing PE of 47x with a consensus target of $364, coming into the session up 16 percent year to date. The company is also pivoting to supply more turbine capacity to the AI industry, with companies like SpaceX scrambling for capacity.

When the market questions the durability of hyperscaler capex, everything downstream of the data center gets sold at once. Turbine makers, engine suppliers, fuel cells, mobile gensets, and power infrastructure names trade as one basket, regardless of individual backlog quality. The $3 trillion commitment figure — roughly triple what the companies owe under outstanding leases and long-term borrowings — now raises the question of whether the AI power trade reprices lower or whether booked demand wins out. For investors, the next signal comes from hyperscaler earnings and any further rate moves, with the 10-year at 4.68 percent leaving little room for valuation expansion in long-duration backlogs.

This article is for informational purposes only and does not constitute investment advice.