The Second Order Effects Of The AI Boom and Those Set To Profit

An AI search takes 10 times the amount of energy (and water) than a typical search engine. Here are the market segments set to profit thanks to energy hungry AI..

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Good Morning Shareholders

Here is a quick overview of the article today if you’d like to skip around!

Research (Free)
AI’s Power Struggle
The Big Investors
FERC Setting The Tone

Investment Potentials (Paid)
Enter The Future
Enter The Investments

The highest density population of millionaires — outside of your grandfather’s retirement community — can be found here between 9:00 AM and 5:00 PM: 2788 San Tomas Expressway Santa Clara, CA 95051.

Why?

This is the corporate headquarters of Nvidia, a lesser-known stock that is up over 3,000% since 2019 (I say sarcastically).

Nvidia is one of the select few companies that capitalized greatly on the AI boom. Interestingly enough, they don’t make an AI chatbot like ChatGPT or Claude, they make everything that happens behind the scenes: hardware and software alike.

If AI is today’s gold rush then Nvidia was the company mass manufacturing pickaxes.

Everyone in the world is now focused on companies making AI, chips, GPUs, and semiconductors; and I love when this happens.

I love it when this happens because investors get tunnel vision. They all focus on a couple of industries and seemingly forget that the rest still exist, but the real money to be made has to be found beyond the hype.

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What’s Beyond The Hype: AI’s Power Struggle

The interior of a data center (livewire.com)

When I stumbled across some data that said AI searches take 10x (yes, ten times) the amount of energy that a typical Google search takes, I immediately got excited. My knee-jerk reaction was to go buy every energy company I possibly could, but we think deeper than that at The Simple Side.

I began with

Doomberg

— who I consider to be a leading voice in the world of energy. They have extensively analyzed the escalating energy demands of AI and its data centers. They highlight that traditional power grids may struggle to accommodate the rapid growth in data center energy consumption, leading to increased interest in self-sufficient energy sources.

So, in just a few hours time I knew three things.

1. AI is becoming increasingly popular.

   1. The userbase continues to grow

   2. The applications continue to grow

2. AI requires massive amounts of power.

   1. An AI search is 10x a typical one

   2. A leading voice on energy thinks power grids can’t accommodate growth in data center energy demand

3. That energy has to come from somewhere.

Now, this wasn’t quite enough to send me over the edge into a full-blown investment thesis.

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Speaking of full-blown, if you haven’t gone paid, take 20% off my full-blown pricing now.

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The Big Boys

Then it was like God himself smacked me in the face. I came across article after article about major corporations making substantial investments in companies working within the energy sector for the advancement of data center and AI power.

Notable examples include:

1. Amazon's Investment in X-energy: In October 2024, Amazon announced a $500 million investment in X-energy, a company specializing in advanced nuclear reactor and fuel technology. This funding aims to support the completion of X-energy's reactor design and licensing, as well as the first phase of its TRISO-X fuel fabrication facility in Oak Ridge, Tennessee. X-Energy

2. Google's Partnership with Kairos Power: Google has entered into an agreement to purchase power from Kairos Power, a developer of advanced SMRs. This collaboration is part of Google's strategy to power its data centers with reliable, carbon-free energy sources. NBC New York

3. Microsoft's Agreement with Constellation Energy: Microsoft has signed a 20-year contract with Constellation Energy to supply its data centers with nuclear power. This deal underscores Microsoft's commitment to sustainable energy solutions for its operations. Investors

4. Rolls-Royce's SMR Development: Rolls-Royce has been actively developing its own SMR technology, securing significant funding from the UK government and private investors to advance its modular reactor designs. Wikipedia

5. Holtec International's SMR Initiatives: Holtec International is progressing with its SMR-160 design, aiming to deploy these reactors in various locations, including the United States and the United Kingdom. The company has sought substantial federal loans to support its SMR projects. Wikipedia

Basically, major companies are putting their money toward energy initiatives right now. If that doesn’t do it for you, then I guarantee you this final part will.

The FERC Setting The Tone

On November 1, 2024, the Federal Energy Regulatory Commission (FERC) put a hard stop on a deal that would have had Talen Energy’s Susquehanna nuclear plant powering Amazon’s Pennsylvania data center directly. FERC is throwing shade on any idea of exclusive power arrangements like these, raising red flags about cost-shifting and grid stability. Translation: if you’re a mega data center that’s planning to hook up to the grid, FERC has other plans for you.

So what’s the move when the grid gives you the cold shoulder?

Go off-grid. Picture it: an AI data center where energy flows in one end, and data flows out the other — no need for a federal permission slip or public grid drama. These self-contained powerhouses are designed to bypass traditional energy infrastructure altogether, and here’s why that’s a genius move:

Off-grid data centers mean total independence—no need for FERC approval or federal oversight. They’re self-contained, ensuring energy security with no risk of blackouts or dips. And best of all, they’re perfectly scalable, built to grow seamlessly with data demands for maximum efficiency.

So less regulation, vertical integration, and scalable? It is every companies dream.

Natural Gas: The Go-To Power Source for Now

So how do you kickstart one of these energy islands? Right now, natural gas is taking the lead. The U.S. already has a massive natural gas network, and compared to coal, it’s cleaner, cheaper, and readily available. Not perfect, but it’ll do the job for now. Here’s why gas is a no-brainer as the first step:

• Plenty of Supply: The U.S. is flush with natural gas, and access is easy.

• Reduced Emissions: Cleaner than coal, though not as green as we’d like.

• Cost-Effective: The price tag makes sense for massive data needs.

But let’s be real — gas is only a stepping stone. Price swings and environmental concerns make it a temporary solution. The long-term plan?
Well, paying subscribers can continue reading, and if you want to join them, you gotta pick up this extra 20% off!