Newsletter · · Ashutosh Agarwal
Industrials Are Back as the AI Power Build Out Fills Order Books - Weekly Industrials Podcast Recap - Week of August 30, 2026
Weekly Industrials Podcast Recap for the week of August 30, 2026. Podcast synthesis on Luke Gromen's electrification thesis, server imports doubling to 194 billion dollars, the aerospace aftermarket land grab, cheaper attritable defense drones, tariffs as both tailwind and cost shock, and a freight cycle bottoming on shrinking supply.
Weekly Industrials Podcast Recap
Week of August 30, 2026: Industrials Are Back as the AI Power Build Out Fills Order Books
Executive summary (TL;DR)
The single loudest idea across the podcasts was that "industrials are back", and that the reason is physical, not financial. After twenty years in which the United States barely added electricity-generating capacity, the country now has to build all at once to feed AI data centers, reshored factories, and general electrification. Veteran macro investor Luke Gromen put it bluntly on The Meb Faber Show (Aug 14): "Commodities are back. Industrials are back," and named Eaton, Parker Hannifin, Danaher, and Illinois Tool Works as companies "sitting right in the middle of this trend."
A few threads tied the whole week together:
- The AI build-out is now an industrials story, not just a tech story. Server imports into the US have literally doubled year-over-year to $194 billion in the first half of 2026, now the single largest US import category, ahead of both oil and cars (Simply Trade, Aug 13). That demand is showing up in Caterpillar's power-equipment backlog, in flatbed trucking rates tied to data-center construction, and even in old jet-engine cores being converted into backup power generators for data centers.
- Aerospace aftermarket (the parts-and-repair business) is the hottest corner of the sector. A Jefferies aerospace banker described "more money out there chasing component MRO than there are deals," with TransDigm and HEICO as the aspirational model and newer names like VSE and AAR re-rating sharply (The Aerospace Executive Podcast, Aug 13 replay).
- Defense modernization is real but messy. The US Air Force is committing to cheaper, attritable "collaborative combat aircraft" drones, good for Northrop, General Atomics, Anduril, Lockheed, and Boeing, even as Boeing takes another charge on Air Force One (Aviation Week's Check 6, Aug 4).
- Two big macro wild cards hang over margins: tariffs and the Iran war. Tariffs are simultaneously a reshoring tailwind and a near-term cost shock (steel and aluminum pushed the average new-car price past $50,000). The Iran war and the near-closure of the Strait of Hormuz are quietly rippling into industrial input costs, most vividly through a Chinese squeeze on the mining chemicals needed to produce copper, cobalt, and nickel (The Jay Martin Show, Aug 21).
- The freight cycle is bottoming, but for an unusual reason. Trucking rates are firming not because demand roared back, but because the government is pulling capacity out of the market (crackdowns on non-domiciled commercial licenses and English-language rules), even as diesel jumped nearly 20 cents in a week and spot rates slid more than seasonally (Odd Lots, Aug 13; FTR State of Freight, Aug 19).
The most active disagreement was about reshoring itself: is bringing industry home a genuine, multi-decade investment supertrend (Gromen's view), or a slogan that collides with brutal arithmetic, Americans who can't afford American-made goods and a build-out that could cost $100–150 trillion (the skeptical view on The Jay Martin Show)?
Synthesis section 1: Dominant themes
1. Electrification and the AI data-center build-out became the industrials thesis
This was the week's biggest idea, and it showed up on nearly every serious investing podcast.
The core argument, made most forcefully by Luke Gromen on The Meb Faber Show (Aug 14): the US "didn't grow their electricity generation capacity for 20 years," and reversing that is not optional. "Otherwise," he said, "you basically… [are] assuming the U.S. is going to be an emerging market in 15 years, like a real emerging market. And I don't think that's going to happen." His conclusion, "Commodities are back. Industrials are back", framed a whole basket of equipment makers (Eaton, Parker Hannifin, Danaher, Illinois Tool Works) as sitting at the intersection of electrification, reshoring, and pricing power. He has recommended the GRID and PAVE infrastructure ETFs to clients for close to four years.
The scale of the AI-driven demand was quantified on Simply Trade (Aug 13) in a way that lands even for a non-specialist. Imports of "computers" (which is overwhelmingly data-center servers) went from $101.4 billion in the first half of 2025 to $194.44 billion in the first half of 2026, nearly a double. For the first time ever, computers are the single largest US import category, ahead of oil and ahead of cars. As the host put it: "it's all AI to build data centers."
The read-through to specific industrials was everywhere: - Caterpillar's power-generation backlog is now the number the market watches most; a Wolfe Research strategist on The Exchange (Aug 3) said "the backlog, I think, is how the stock initially trade[s] off it," with everything "dependent upon the AI build-out." - First Solar's CEO, on Squawk on the Street (Aug 7), said commercial solar demand is "all driven by… load growth and data centers and reindustrialization and electrification in general." - Even legacy jet-engine cores are being repurposed: a Jefferies banker on The Aerospace Executive Podcast (Aug 13 replay) described suppliers taking old CFM engines and turning them "into backup power… for AI data centers," instantly turning an industrial-gas-turbine sideline into "just as hot of a story as aerospace."
2. The aerospace aftermarket (MRO) is the most sought-after niche in the sector
"MRO" means maintenance, repair, and overhaul, the business of keeping planes flying after they're sold. On The Aerospace Executive Podcast (Aug 13 replay), Jefferies banker Nick Fazioli explained why investors are crowding in: aftermarket parts businesses offer "a little bit higher margin, lower CapEx, less… heavy workforce" than most industrial models. His line captured the mania: "the amount of people that are calling me right now saying, hey, I want to invest in… component MRO… there's a lot of people. There's more money out there chasing component MRO than there are deals."
The template everyone wants is TransDigm's: "most investors would love… a lower TransDigm model where you own the IP, you manufacture the part, you own the design. That's like the dream." He also flagged a wave of industrial and aerospace IPOs ("it's full steam ahead"), noting the public universe of aerospace names had shrunk ~40% over 15–20 years through buyouts and take-privates and is now refilling.
3. Defense modernization is committing to cheaper, "attritable" drones
On Aviation Week's Check 6 (Aug 4), defense editors Steve Trimble and Brian Everstein detailed where the US Air Force is heading with Collaborative Combat Aircraft (CCA), uncrewed "loyal wingman" drones that fly alongside fighters. The new leadership is comfortable staying at the cheaper end rather than building exquisite, expensive aircraft: nine companies are competing, to be narrowed to roughly six designs and then a small number of prototypes by around next May. Contenders named included Boeing's MQ-28 Ghost Bat, Northrop Grumman's self-funded YFQ-48 Talon Blue, Lockheed Martin's Vectis, General Atomics' YFQ-42, and Anduril's YFQ-44. Separately, Trimble discussed Boeing taking a fresh $280 million charge on the Air Force One (VC-25B) program, pushing total losses on that fixed-price program past $3 billion, with L3Harris handling modifications on the Qatar-donated bridge aircraft.
4. Tariffs: a reshoring tailwind and a near-term cost shock at the same time
Tariffs came up on almost every macro podcast, and the tone was two-sided. On the structural side, Gromen framed the whole tariff push as part of a durable shift to "Hamiltonian economics", protecting and rebuilding domestic industry as a national-security imperative, that has continued across the Trump and Biden administrations alike. On the practical side, Simply Trade (Aug 13) showed the immediate pain: passenger-vehicle imports have fallen from a record $107 billion (first half of 2024) to roughly $84–85 billion as tariffs bite, while steel and aluminum duties helped push the average new-car price past $50,000. Flexport CEO Ryan Peterson, on Prof G Markets (Aug 6), said the newer Section 301 tariffs (10–12.5% across 60 economies) are "a manageable rate" that importers can live with if stable, and, crucially, more likely to survive legal challenge than the earlier IEEPA tariffs the Supreme Court struck down.
5. The freight cycle is bottoming: driven by shrinking supply, not booming demand
Two freight podcasts painted a consistent, counterintuitive picture. On Odd Lots (Aug 13), Truck Parking Club's Reid Lustolo argued the rate rebound is being driven by capacity leaving the market: government crackdowns on non-domiciled commercial driver's licenses and English-language proficiency (under DOT chief Sean Duffy), plus a Supreme Court broker-liability ruling, have "structurally… chopped [capacity] out of the market." Flatbed in particular "has been booming, and data centers… [have] a lot to do with that."
The hard data from FTR State of Freight (Aug 19) was more sobering in the very short term: diesel jumped 19.7 cents in a week to $5.45/gallon (highest since early July), flatbed spot rates fell the most in a comparable week since 2008 (a ninth straight weekly decline), and the producer-price index for less-than-truckload freight fell a record 4.6% in a month. Volumes were up only 9.5% year-over-year, the softest comparison in months.
6. Critical minerals and rare earths are a national-security build-out of their own
On The KE Report (Aug 7), resource investor Nick Hodge described copper as "the metal of the year," pointing to a flood of copper into US COMEX warehouses, tightening London markets, and chronic production shortfalls at Chile's Codelco. On rare earths, he emphasized the heavy rare earths used in defense (missiles, guidance systems), "not the ones that MP Materials produces", and the government's growing willingness to take equity stakes and hand out loan guarantees (Energy Fuels received roughly a $750 million loan guarantee).
Synthesis section 2: Active debates
Debate 1: Is reshoring a genuine investment supertrend, or a slogan that fails the math? - Bull (Luke Gromen, The Meb Faber Show, Aug 14): Reshoring is a structural, multi-decade shift that will hand pricing power and demand to US industrial and electrical-equipment makers. "If offshoring all of this stuff to China was disinflationary, which we know it was, by definition, reversing it has to be reflationary." Industrials, commodities, and gold are the winners of the new regime; long-term bonds are the losers. - Bear (Josh Farazid & Merle Nye, The Jay Martin Show, Aug 21): The idle US factory base "lost the competition 30 years ago," and "going back in time is not an industrial strategy. It's just a press release." Worse, the arithmetic doesn't close: China's build-out cost roughly $41 trillion in cheaper money; replicating it in the US could cost $100–150 trillion against a country already $39 trillion in debt. And most American households can't actually afford goods made at American wages.
Debate 2: Does the AI capital-spending boom help industrials, or is it a bubble that competes with everyone for money? - Constructive read: The build-out is directly filling order books at Caterpillar, electrical-equipment makers, engine-core repurposers, and data-center-linked freight. - Cautionary read (Gromen, Aug 14): AI is "borrowing massive amounts of money, competing with [the Treasury] for money," driving up capital costs "at a time where we can't afford rates much above 4.7%", and eroding the white-collar tax base even as it builds. A revolutionary technology with a fiscal sting in the tail.
Debate 3: Are tariffs a net positive or a net drag for industrial margins right now? - Positive framing: Section 301 tariffs are "manageable" and durable (Ryan Peterson, Prof G Markets, Aug 6); they firm up domestic order books, First Solar's CEO called the new crystalline-silicon tariffs "one of the most strategically significant trade measures in decades" (Squawk on the Street, Aug 7). - Drag framing: Steel and aluminum duties are raising input costs across autos and equipment (average new-car price now above $50,000; Simply Trade, Aug 13), and the compliance burden, proving country-of-smelt and percentage of steel/aluminum in each part, is "as high as the tariff burden" (Peterson, Aug 6). - A subtler point (Andreas Steno Larsen, Real Vision Macro Mondays, Aug 17): Because corporations are receiving tariff refunds, they are "getting paid by the U.S. Treasury to stand pat on prices", an underappreciated reason goods inflation has stayed flat rather than spiking.
Debate 4: How much should industrial investors worry about the Iran war? - It matters a lot (The Jay Martin Show, Aug 21): The near-closure of the Strait of Hormuz is squeezing China's supply of Persian Gulf sulfur, which China turns into the mining chemicals (sulfuric acid, sodium metabisulfate) the whole world needs to extract copper, cobalt, and nickel. China has started canceling exports, prices have "nearly doubled since the Iran war began," and miners from the DRC to Chile to Indonesia are being told to ration, pushing up the cost of "the copper wiring behind the drywall in your house [and] the data centers running every AI tool." - It's a spike that's already fading (Andreas Steno Larsen, Real Vision, Aug 17): The energy-price spike from the war "peaked" and is retracing, which is actually disinflationary going into next year, a net positive for the broader cycle even if specific input costs stay elevated.
Debate 5: Is the freight rebound durable? - Structurally supported (Reid Lustolo, Odd Lots, Aug 13): Capacity has been permanently removed by regulation, so rates should hold and the market couldn't flood with new supply the way it did after COVID. - Still soft in the data (Avery Weiss, FTR State of Freight, Aug 19): Spot rates are falling more than seasonally, load volumes are at their second-lowest of 2026, and the year-over-year rate comparisons are the weakest in months.
Synthesis section 3: Stocks mentioned
Below is every clearly industrial-sector company named across the podcasts, with the bull and/or bear angle, the episode, the speaker, the date, a representative quote, and the source link. (Semiconductor and pure-tech names that came up in passing, AMD, Micron, SanDisk, Western Digital, the hyperscalers, are noted only where they bear directly on industrials.)
Defense & Aerospace
Boeing (BA) - Bear angle: Another charge on the Air Force One program. On Aviation Week's Check 6 (Aug 4), Steve Trimble discussed Boeing's roughly $280 million charge on the VC-25B (Air Force One) program, pushing cumulative reach-forward losses on that fixed-price contract past $3 billion. - Bull angle: On The Exchange (Aug 3), the hosts noted "Boeing popping 5% today as the FAA certifies the 737 MAX 7 to fly", a milestone for the MAX family. Boeing's MQ-28 Ghost Bat was also cited as an existing drone in the CCA conversation. - Quote: "We also have Boeing popping 5% today as the FAA certifies the 737 MAX 7 to fly." - Sources: Aviation Week's Check 6 Podcast; The Exchange
Northrop Grumman (NOC) - Bull angle: Positioned in the next round of Air Force drones. On Aviation Week's Check 6 (Aug 4), Steve Trimble said "Northrop obviously is interested in increment two with the YFQ-48 Talon blue… which they have self-funded," signaling the company has "made its bet" on the attritable-drone category. - Quote: "Northrop obviously is interested in increment two with the YFQ-48 Talon blue, which they have self funded… So clearly Northrop has made its bet on continuing in that category." - Source: Aviation Week's Check 6 Podcast
Lockheed Martin (LMT) - Bull angle: A potential CCA contender via its Vectis design. On Aviation Week's Check 6 (Aug 4), Trimble noted "maybe Locky Martin Vectis will be available… a little bit higher end, but not… full tilt toward exquisite." - Quote: "Maybe Lockie Martin Vectis will be available. Maybe that's a little bit higher end, but not on the full tilt toward exquisite." - Source: Aviation Week's Check 6 Podcast
L3Harris Technologies (LHX) - Neutral/context: Named as the integrator modifying the Qatar-donated VC-25B "bridge" Air Force One aircraft (Aviation Week's Check 6, Aug 4, per the episode's defense discussion led by Steve Trimble). - Source: Aviation Week's Check 6 Podcast
GE Aerospace (GE) - Context: Referenced as a leading military-engine supplier ("uniquely positioned to support its defense customers"), and its CFM engine cores are exactly the type now being converted into data-center backup power (see The Aerospace Executive Podcast below). Discussed on Aviation Week's Check 6 (Aug 4). - Source: Aviation Week's Check 6 Podcast
TransDigm (TDG) - Bull angle: The aspirational model for the whole aftermarket-parts business. On The Aerospace Executive Podcast (Aug 13 replay), Nick Fazioli (Jefferies) called it the "dream" model, own the intellectual property, make the part, own the design, noting TransDigm and HEICO have "always existed in this kind of halo effect." - Quote: "Most investors would love… a lower TransDigm model where you own the IP, you manufacture the part, you own the design. That's like the dream." - Source: The Aerospace Executive Podcast
HEICO (HEI) - Bull angle: Cited alongside TransDigm as the long-standing "halo" name in aerospace aftermarket that investors have crowded into for lack of alternatives, a scarcity that is now driving demand for newer public comps. The Aerospace Executive Podcast (Aug 13 replay), Nick Fazioli. - Quote: "Heiko and Transdime have always existed in this kind of halo effect… you can only allocate so much equity and capital to Heiko, Transdime." - Source: The Aerospace Executive Podcast
VSE Corporation (VSEC) - Bull angle: The breakout success story of the aftermarket wave. On The Aerospace Executive Podcast (Aug 13 replay), Nick Fazioli described how, under CEO John Cuomo, VSE went from a ~$400–450 million market cap and "five unrelated businesses" to about $6.3 billion by focusing purely on aerospace, and can now "raise a billion in a day" in the equity market. - Quote: "6.3 billion when he took over that company, I think the market cap was something to the effect of like 400 million, 450 million… now he can go into the markets and raise a billion in a day." - Source: The Aerospace Executive Podcast
AAR Corp (AIR) - Bull angle: Cited as a newer aftermarket name enjoying "a really nice… semi re-rating under John Holmes," helping build out a broader public comp universe for MRO investors. The Aerospace Executive Podcast (Aug 13 replay), Nick Fazioli. - Quote: "AAR stock has had a really nice… semi re-rating under John Holmes." - Source: The Aerospace Executive Podcast
Standard Aero (SARO) - Context/bull: Named among the wave of aerospace IPOs ("Carlisle took Standard Aero public") illustrating how quickly the public aerospace universe is refilling. The Aerospace Executive Podcast (Aug 13 replay), Nick Fazioli. - Quote: "You got Standard Aero, Carlisle took Standard Aero public… it's full steam ahead." - Source: The Aerospace Executive Podcast
Honeywell (HON) - Bear/context angle: Flagged for supply-chain difficulties on its FlexJet engine commitments. On The Aerospace Executive Podcast (Aug 13 replay), the hosts noted "Honeywell had its challenges with FlexJet… and it's all supply chain focused." - Quote: "Honeywell had its challenges with flex jet and… it's all supply chain focused." - Source: The Aerospace Executive Podcast
Multi-industry, Electrical Equipment & Machinery
Eaton (ETN) - Bull angle: A prime beneficiary of grid rebuild and electrification. On The Meb Faber Show (Aug 14), Luke Gromen named Eaton among the industrial companies "sitting like right in the middle of this trend," set to gain both demand and pricing power as the US reverses 20 years of grid stagnation. - Quote: "They were companies like Eaton, Parker Hannafin, Danaher, Illinois Toolworks… They're sitting like right in the middle of this trend and they're going to get demand. They're going to get pricing power." - Source: The Meb Faber Show - Better Investing
Parker Hannifin (PH) - Bull angle: Same electrification/reshoring thesis from Luke Gromen on The Meb Faber Show (Aug 14), one of the equipment makers positioned to benefit from the US electricity build-out. (Named in the same list as Eaton above.) - Source: The Meb Faber Show - Better Investing
Danaher (DHR) - Bull angle: Named by Luke Gromen on The Meb Faber Show (Aug 14) among the industrial names sitting "right in the middle" of the electrification trend. (Same list as Eaton above.) - Source: The Meb Faber Show - Better Investing
Illinois Tool Works (ITW) - Bull angle: Also named by Luke Gromen on The Meb Faber Show (Aug 14) as an electrification/reshoring beneficiary with demand and pricing-power upside. (Same list as Eaton above.) - Source: The Meb Faber Show - Better Investing
Caterpillar (CAT) - Bull angle (with a high bar): Its power-generation backlog has become the key AI-infrastructure tell. On The Exchange (Aug 3), Wolfe Research's Chris Sinek noted Caterpillar had "beaten consensus estimates the last three quarters [by] 10% or more," with the market focused on the backlog and power-equipment trends tied to the AI build-out. - Bear/caution: The stock was "down about 14% over the past month" heading into the print, and expectations were elevated ("the bar here is high"). - Quote: "You've got data center power demand, backlogs, tariffs all top of mind… the market's going to really focus on the backlog… This is all dependent upon the AI build out." - Source: The Exchange
Industrial gas-turbine / engine-core suppliers (Chromalloy, EFTAY, Doncasters, mostly private) - Bull angle: Old aero-engine work is now a "derivative AI play." On The Aerospace Executive Podcast (Aug 13 replay), Nick Fazioli described suppliers converting used CFM engines into backup power for AI data centers, turning industrial-gas-turbine exposure "just as hot… as aerospace." - Quote: "The EFTAI is taking CFMs and they're going to turn them into… backup power or power… for AI data centers, like you just never… could have seen that coming." - Source: The Aerospace Executive Podcast
Power / Electrical (data-center linked)
First Solar (FSLR) - Bull angle: A direct winner from new crystalline-silicon tariffs and from data-center power demand. On Squawk on the Street (Aug 7), CEO Mark Widmar called the tariffs "one of the most strategically significant trade measures in decades," said the US solar supply chain supports "40,000 jobs… about $4 billion of annual payroll," and tied demand to "load growth and data centers and reindustrialization." - Bear/caution: Widmar acknowledged aluminum tariffs raise his own input costs ("we buy aluminum as well… we obviously deal with those implications"). - Quote: "This is about national security… decoupling our self-independency on China supply chains… our supply chain right now here in the U.S. supports 40,000 jobs… about $4 billion of annual payroll." - Source: Squawk on the Street
Freight & Transports (industry conditions; individual carriers not named)
Trucking / freight brokers (industry-level) - Bull angle: Rates are being supported structurally as regulation removes capacity; flatbed is "booming" on data-center construction (Odd Lots, Aug 13, Reid Lustolo of Truck Parking Club). - Bear/caution: Diesel jumped 19.7 cents to $5.45/gallon, spot rates fell more than seasonally (flatbed's ninth straight weekly decline), and LTL producer prices fell a record 4.6% in a month (FTR State of Freight, Aug 19, Avery Weiss). - Quote (bull): "We've seen a massive… crackdown on English language proficiency, on non domiciled CDLs… a lot of capacity has kind of structurally been chopped out of the market." - Quote (caution): "Flatbed spot rates fell just under $0.08 for a ninth straight week-over-week decrease, dropping to their lowest level since late April." - Sources: Odd Lots; FTR | State of Freight
Critical minerals & rare earths (industrial inputs)
MP Materials (MP) - Context/nuance: Named as the best-known rare-earth producer, but Nick Hodge on The KE Report (Aug 7) argued the heavy rare earths most critical for defense are "not the ones that MP Materials produces," pointing investors toward heavies (gallium, yttrium, indium) for missiles and guidance systems. - Quote: "These heavier rare earths, not the ones that MP Materials produces, are super important for the defense applications, for the missiles, for the guidance systems." - Source: The KE Report
Energy Fuels (UUUU) - Bull angle: Hodge's preferred heavy-rare-earth and uranium name, backed by government support. On The KE Report (Aug 7) he said it "got a… large… I think it was like $750 million or something like that loan guarantee," and that he "continue[s] to be a buyer" after the stock fell from the low $20s to ~$11–12. - Quote: "Energy Fuels… got a super, well, maybe not super, but it was large… like $750 million or something like that loan guarantee in the past couple of months… I continue to be a buyer of that stock." - Source: The KE Report
Ero Copper (ERO) - Bull angle: A copper name Hodge bought into the rebound. On The KE Report (Aug 7) he said "ERO, I did that last week and it's up like 15% in… six days," part of his view that "copper is definitely turning out to be the metal of the year." - Quote: "Last time we spoke, I told you I wanted to buy Aero Copper. Well, ERO, I did that last week and it's up like 15%." - Source: The KE Report
Infrastructure / electrification ETFs (thematic)
GRID and PAVE ETFs - Bull angle: Luke Gromen's recommended vehicles for playing the US electricity and infrastructure build-out. On The Meb Faber Show (Aug 14) he said he's recommended "the Grid and Pave ETFs, GRID, PAVE" to clients "for the last three plus years… the companies that make up those… are the types of companies that you want to own." - Quote: "I've been recommend[ing] for clients for the last three plus years… the Grid and Pave ETFs, GRID, PAVE." - Source: The Meb Faber Show - Better Investing
One HVAC / building-products note
Most HVAC and building-products podcasts this period were contractor/operator shows about running a service business rather than investor commentary on manufacturers (Carrier, Trane, Lennox, Johnson Controls). The one broadly relevant thread: Building HVAC Science (EP283, Aug 14) discussed AI being used as a "thinking partner" to improve technician diagnostics and workflows rather than to replace workers, a demand/productivity signal for the trade, if not a direct stock call. Source: Building HVAC Science