“As an investor, we love the bottlenecks. That’s where economic value accrues”

Eli Horton, TCW

“We’re not going to love NVIDIA at 6 to 8 percent. We’re going to love it at 2, 2.5 percent”

Jim Worden, The Wealth Consulting Group

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A decade of software gives way to steel

TCW’s Eli Horton sees the largest capital cycle in decades reshaping the market, even as the index stays weighted toward the winners of the last one

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Eli Horton

TCW

Jim Worden

The Wealth Consulting Group

Industry experts

A high-voltage transformer ordered today may not arrive for three years. Utility contractors are struggling to find enough crews to raise power poles. Engineering and construction firms have become labor hold-ups themselves. Electricity is scarce enough in some regions that large technology companies are paying extraordinary premiums to secure supply. Eli Horton invests in precisely the scarcity he describes. A managing director and senior portfolio manager at TCW, Horton focuses on identifying the companies positioned to benefit from what he believes is one of the largest capital investment cycles in modern economic history. His work centers on themes including electrification, energy security, AI infrastructure, and industrial reshoring − areas where long-term investment demand is reshaping competitive dynamics across multiple industries. One strategy reflecting that view is the TCW Transform Systems ETF (PWRD), an actively managed ETF that invests in the companies that build and supply the electrical grid.

TCW is a privately held, global asset manager with more than 50 years of experience across fixed income, public equity, and alternative credit. As an investment-led firm and trusted financing partner, we invest with intention − focusing only where we have a discernible and repeatable edge. Guided by disciplined decision-making, deep research, and a high-conviction approach, we build carefully curated portfolios designed to deliver lasting advantage for our clients across market cycles.

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Eli Horton is a senior portfolio manager for TCW’s equity products, with extensive experience across public and private markets. He joined TCW as part of its acquisition of Engine No. 1. Prior to his role with Engine No. 1, Horton was a managing director at Maverick Capital, a long-short investment firm where he invested in industrials and a range of cyclical and secular growth industries. Earlier in his career, he was a member of the technology and retail private equity teams at KKR, following his experience in investment banking within the technology, media, and telecom group at Goldman Sachs. Horton has a bachelor of science in accounting and a master of accountancy from the Marriott School of Business at Brigham Young University.

TCW

Eli Horton

With more than 22 years of professional investment experience, Jim Worden has experience as an advisor, in building and overseeing multiple advisory platforms, and in managing two mutual funds. Worden has built fundamental, risk-based, and quantitative investment strategies using mutual funds, ETFs, and equities as well as those focused on alternatives or technical analysis. He has built models emphasizing active management, passive management, a blended core-satellite approach, and single or multi-factor approaches. More recently, Worden helped oversee the portfolio management, analysis, and due diligence for $4 billion of managed assets at Allworth Financial. He graduated with a bachelor of science in international business management from Brigham Young University.

The Wealth Consulting Group

Jim Worden

Published July 27, 2026

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The next five years will add roughly 50% more electricity demand each year than the US averaged over the past decade.

15–20% increase in US electricity demand is projected over the next decade, driven by AI, electrification, and manufacturing.

3% annual growth in US electricity demand is expected over the coming years − the strongest sustained growth in decades.

Up to 12% of US electricity could be consumed by data centres by 2028, up from about 4.4% in 2023.

The power shift

The S&P 500’s 10 largest companies now account for roughly 40% of the index.

One grid: AI, EVs, manufacturing, and electrification are all competing for the same power infrastructure.

US electricity demand was largely flat for 15 years, discouraging major grid investment.

Behind the infrastructure trade

“As an investor, we love the bottlenecks,” Horton says. “That’s where economic value accrues.” In a recent Investment News TV roundtable, Horton clearly frames the opportunity. For most of the past two decades, a company that wanted to expand could find capital and clear the permits; the hard part was financing, not hardware. That has flipped. When the thing in short supply is a transformer rather than a loan, the firms that make the transformer set the price, and they keep setting it until someone builds enough new capacity to undercut them. That can take years. For Jim Worden, chief investment officer of The Wealth Consulting Group, there is a growing sense that many of the market’s most important drivers are proving more durable than a typical economic cycle.

The forces driving demand for power, industrial capacity, and infrastructure spending beg the question as to whether equity markets are entering a new capital cycle, and whether portfolios remain positioned for it. A textbook capital cycleHorton calls this a “classic capital cycle.” The grid is close to a textbook instance. US electricity output grew about 5 percent a year from 1950 to 2000 and then went flat for roughly two decades.1 Twenty years of flat demand meant 20 years of

thin investment in transmission equipment and in the factories that produce it. Demand has now returned. AI data centers, factories returning from overseas, and the steady electrification of cars and buildings are pulling on the grid at the same time. Horton expects those demand drivers to persist for decades rather than quarters. In his view, investors focused solely on the headline beneficiaries of AI may be overlooking a broader opportunity set that extends across utilities, transmission networks, infrastructure providers, equipment manufacturers, and other businesses enabling the buildout of the modern economy. Horton puts electricity demand growth at close to 3 percent a year for the next few decades,2 enough to double the grid. That figure sits at the bullish end of the range; the federal Energy Information Administration’s near-term forecast is closer to 2 percent.3 What interests Worden is the second-order effect. Rising power demand pulls through transmission and generation, and from there through the industrial companies, utilities, and equipment makers that most portfolios barely own. For Horton, identifying those opportunities requires looking beyond traditional sector labels and understanding where capital is flowing across the broader ecosystem.

What the index missesRather than evaluating opportunities through traditional sector classifications, Horton says investors should look across entire value chains. In power infrastructure, that means following capital from generation and transmission through distribution, grid modernization, and the software systems that help manage increasingly complex electrical networks. In Worden’s words, a capitalization-weighted index hands the biggest share to the companies that have already performed best; those weights pull in more money, which makes the winners larger still. He points to NVIDIA, known a few years ago mainly for the chips that ran video games, until investors realized the same hardware was well suited to large language models. Much of today’s market leadership emerged from an area the index itself was never designed to anticipate. Horton believes that dynamic creates opportunities for active investors. Broad indices are inherently backward-looking, allocating increasing amounts of capital to past winners while many beneficiaries of new capital-investment cycles remain relatively small positions for years. He notes that the 10 largest stocks now account for nearly 40 percent of the S&P 500,4 one of the highest levels of concentration in decades, creating fertile ground for investors willing to look beyond the benchmark.

By Horton’s estimate, investors who simply own the index have less exposure to the energy transition and infrastructure buildout than they realize. Much of the market remains concentrated in the winners of the low-rate, asset-light era, while many beneficiaries of electrification, energy security, industrial reshoring, and grid investment remain comparatively small weights in broad-market portfolios

Worden asks of any headline whether the force behind it will still matter in a few years or is merely the latest enthusiasm. “When in doubt, zoom out,” Worden says. AI will produce its share of meme-stock and speculative behavior, which is why he keeps the focus on fundamentals rather than the latest story. The allocation you didn’t chooseKnowing what you own leads to a harder question: how much do you own? Worden likes the mega-cap names, but only in proportion. “We’re not going to love NVIDIA at 6 to 8 percent,” he says. “We’re going to love it at 2, 2.5 percent.” Open almost any broad equity fund and the largest positions will often account for a substantial share of the portfolio, not because an advisor selected them but because the index methodology did. The discussion Horton and Worden are having asks advisors to revisit the assumption.

The next cycle may reward a different set of businesses. Not the companies consuming ever larger amounts of power, but some of the companies generating it, transmitting it, and supplying the equipment that makes expansion possible. Horton believes many portfolios already have substantial exposure to the winners of the last cycle through broad-market benchmarks. The more important question, he argues, is whether investors have enough exposure to the companies likely to benefit from the next cycle − one defined by electrification, infrastructure investment, energy security, and the physical buildout required to support an increasingly digital economy. The answer may determine where the next generation of market leaders emerges.

When in doubt, zoom outThe discussion repeatedly returns to what happens beneath the surface of the AI story. Horton says chasing headlines is a reliable way to lose money over time. He invokes Stan Druckenmiller, whose discipline is to position for what comes next rather than what is already in the news; a headline, by definition, describes the present. Horton’s own work involves synthesizing what competitors, customers, suppliers, and management reveal about a business into a differentiated view, and acting only when the stock looks mispriced against it.

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