The Next Wave of the AI Trade Comes for Power

Right now, the consensus on Wall Street is that AI is a good thing.

It will drive productivity and, in that sense, could rival the massive productivity boom of the 1990s internet buildout.

Investors are shifting their focus right now from hyperscalers building out AI programs to the chip manufacturers. But we suspect there’s more room to run on the infrastructure side.

As more and more AI programs come online and data centers become operational, power demand will continue to rise, too:

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America’s power needs are rising at their highest rate in decades, thanks to the buildout of data centers and soaring AI demand. (Source: Bank of America)

In fact, thanks to the AI buildout, your local utility has become less of a stodgy “widows and orphans” stock to own and more of a reasonable growth story.

The power shortfall in the years ahead is expected to hit over 100 gigawatts (GW).

And, of course, America’s power grid is a largely decentralized, outdated beast. Modern data centers require large amounts of power, and steadily. That’s why nuclear has been the big story.

But nuclear will take years to play out. While we like that trend and see upside, it’s not the area offering an immediate solution.

While nuclear energy will be the primary power source for many future data centers, it will also need a backup. That’s why local utilities matter. And it’s why on-site power generation is becoming a big story in the latest stage of the AI boom.

Today’s Grey Swan Pro looks at a company that can bridge the energy gap, providing data centers with critical power needs while the nuclear story is still taking time to play out — details here.

~ Andrew

P.S. Yesterday’s Grey Swan Live! with Shad Marquitz covered the essential commodity bedrock underpinning the AI buildout. Many critical materials, such as rare earths, are part of that story.

Plus, metals such as tungsten are also critical for national security and defense spending. And there’s a boom ahead for resource producers in North America that can supply those metals.

Shad broke down how he found companies like MP Materials before last year’s government investment, and the critical metals likely to see government support from Uncle Sam for national security purposes.

The replay is up on the site for members who missed out live yesterday. As usual, Shad provided a great shopping list for those looking to benefit from the AI buildout story.

Right now, the consensus on Wall Street is that AI is a good thing.

It will drive productivity and, in that sense, could rival the massive productivity boom of the 1990s internet buildout.

Investors are shifting their focus right now from hyperscalers building out AI programs to the chip manufacturers. But we suspect there’s more room to run on the infrastructure side.

As more and more AI programs come online and data centers become operational, power demand will continue to rise, too:

Turn Your Images On

America’s power needs are rising at their highest rate in decades, thanks to the buildout of data centers and soaring AI demand. (Source: Bank of America)

In fact, thanks to the AI buildout, your local utility has become less of a stodgy “widows and orphans” stock to own and more of a reasonable growth story.

The power shortfall in the years ahead is expected to hit over 100 gigawatts (GW).

And, of course, America’s power grid is a largely decentralized, outdated beast. Modern data centers require large amounts of power, and steadily. That’s why nuclear has been the big story.

But nuclear will take years to play out. While we like that trend and see upside, it’s not the area offering an immediate solution.

~ Andrew

P.S. Yesterday’s Grey Swan Live! with Shad Marquitz covered the essential commodity bedrock underpinning the AI buildout. Many critical materials, such as rare earths, are part of that story.

Plus, metals such as tungsten are also critical for national security and defense spending. And there’s a boom ahead for resource producers in North America that can supply those metals.

The replay is up on the site for members who missed out live yesterday. As usual, Shad provided a great shopping list for those looking to benefit from the AI buildout story.

Copper and resources are sending us a cleaner market signal than AI stocks.

Channeling Ludwig von Mises, we observe this morning that price is not just a number; it’s information. Price reflects what buyers and sellers collectively believe: demand, scarcity, fear, speculation, disappointment, future expectations and available supply.

When prices rise, and inventories fall at the same time, the message is usually straightforward: buyers need the stuff, and there is not enough of it.

A low VIX does not predict disaster. It measures complacency. A serial skeptic will read it as the calm before a storm. We shook off that feeling this morning and opted to pursue an opportunity instead.

Here goes:

A VIX reading below 15 means the market is not pricing in much near-term trouble, even though there are obvious risks still sitting in the room: Iran, oil prices, memory chip speculation, circular financing, high valuations, epic high concentrations, spiking long-term interest rates, a regime change at the Fed, a meltdown in Japan and a historic deficit and rising national debt.

Money is not flowing in a clean, straight line from outside investors to productive businesses. The firms at the top are investing in and buying from each other.

Microsoft and OpenAI are the easiest examples to follow.

Microsoft says OpenAI has contracted to purchase an additional $250 billion in Azure services, while Microsoft continues to account for $13 billion in funding commitments to OpenAI as an investment.

At this stage, it’s a stock picker’s market.