In around the world in 80 days, on the final leg of his adventures, Jules Verne’s famous hero Phileas Fogg has to get from the U.S. back to the U.K. or else lose his bet. He is on a steamer and in the end he chops the ship up to feed into the boiler to maintain the speed needed to get back to Britain in time.
This is an apt metaphor for what will drive AI.
Step back a few years and there was a lot of controversy about how bitcoin was going to boil the oceans because it needed so much energy to create a new bitcoin. This was another crypto monster that people called for government to extinguish. You can now forget that risk to humanity, not because it has gone away but because a mightier energy consuming beast has risen. The new energy-consuming kraken is AI.
AI uses the same sort of chip technology that crypto does. You can think of these chips as borderline short circuits that run extremely hot and consume about 250-500 watts of electricity per unit of compute. To do AI you need thousands upon thousands of these units, billions of dollars of them, blowing hot air like a $2,000 fan heater. That’s a lot of energy. That is power stations’ worth of energy when you start doing AI at the level of Google, Microsoft, Amazon, China, Russia etc. But that is just the start of the problem. The real problem is there is no limit to how much AI you can use, and what’s worse there is no second place in the race for intelligence. The winner, the wielder of the smartest AI, takes it all and the winner will be the country and/or company with the best AI.
Back in early 2024 I wrote these articles on how AI would boil the oceans: AMD And Nvidia Will Boil The Oceans and AI Will Boil The Oceans
What is now obvious to me is that AI is moving faster than any other technological breakthrough I’ve ever seen and this adds yet another dimension. This speed is truly indicative of a revolution, not some evolution passing off as something bigger. The political and economic pressure wave of this is changing the landscape in weeks, not years.
Remember nuclear energy? Remember Jane Fonda and Michael Douglas in The China Syndrome driving a stake through the heart of the global nuclear industry? Nuclear power, even as climate change rose as the defining global issue, was still perceived as so evil that Germany shut its whole fleet of generators off even though everyone accepted nuclear was one and possibly the only way of providing energy without risking death by greenhouse.
Well nuclear is back, because AI needs it, not because peasants risk freezing in their hovels. Forget Chernobyl, forget the untold fears of an invisible menace that will kill your children, Uranium is no longer non-Uranium. Nuclear is back and reopening, not yet in Germany, but yes at the surprisingly not renamed Three Mile Island with more plants coming soon.
Yet hold on, let us not surf the slopes of apocalyptic thinking, let’s clear the fear from our minds and imagine that this is going to go right. So let’s make some guesses.
The planet is going to need 10 times more electricity. That’s a big number, maybe way too big or maybe nowhere near big enough, but the electricity needed is not going to be a linear growth dynamic, it’s going to be geometric.
That changes everything right there. Energy is the core driver of civilization and if humanity boosts its ability to generate power by such a function, huge benefits will fall out from that. Of course, the worrywarts will claim we will all be burnt to a crisp but they won’t get a look in here because the AI winner will take all and no country will hold back and risk being utterly dominated by another now smarter polity prepared to burn more boats to win its bet. Those that love to be the red flag wavers walking in front of progress will not be employed to do so because the fastest car in this race wins the geopolitical grand prix and the hegemony cup.
So how do we invest in this?
Obviously, perhaps too obviously, you can invest in uranium, but the opportunity is much broader. It’s not just about nuclear, it’s about everything in the AI value chain. My bet is on the electricity generators, but you may as well think in terms of the copper that is going to be needed and where it will come from or the construction companies that will build out the infrastructure. It’s a cornucopia of opportunity.
When artificial muscle was invented 92% of the workforce was put out of work, no wonder the Luddites didn’t like those machines. Within 100 years the population had risen from 6 million to 21 million and life expectancy had gone up by a third. Since then, with the help of all sorts of trans-humanity, life expectancy has nearly doubled. We are now as rich in material things as Rockefeller and certainly richer, if you discount the value of being able to throw people in dungeons and live in dusty castles, than kings of yore.
AI is going to repeat that outcome to the next level and working out where to put your money now is a must.
So here are some suggestions:
- Energy infrastructure
- Commodities infrastructure
- Sever farms infrastructure
- Chip infrastructure
See the theme? This wave is so big and is moving so fast, the initial opportunity is in the classic “pick and shovel” strategy and that will pivot, outside of the glitzy GPU arena, on energy and sheds filled with hot computers.
The key to this whole huge change is there is no limit to demand for intelligence and there is no second place in using it. That is why not only won’t the genie go back in the bottle, it’s going to go through an accelerating growth phase and that phase is already underway.
People will get very scared, but remember Phileas Fogg did make it across the ocean and he did win his bet and it all ended happily.
Disclosure: I own AMD, a maker of AI equipment.