We presented the trade idea that a surge in artificial intelligence demand is sparking the need for significant upgrades to the nation's decades-old power grid as new data warehouses come online. Several of the nation's power grids face increasing power brownout/blackout risks during high-demand periods. This overview we provided premium subscribers was published in a Wednesday note titled "The Next AI Trade."
Cloud-computing startup CoreWeave's co-founder and chief strategy officer, Brian Venturo expands more on this. He spoke on Thursday at the Bloomberg Intelligence Summit on generative AI in New York.
He said the world is "grossly" underestimating how much AI demand will expand the need for data centers across North America and the world.
Venturo said the cloud computing provider has seen an "absurd" amount of data center requests over the last several quarters. He noted that some companies are asking to reserve entire campuses for themselves.
"There are going to be some things that this industry is going to have to work through," Venturo said, adding, "What worries me" is that there's not enough infrastructure to handle the demand.
He stressed, "It's a sprint. It's a sprint that requires all the capital in the world" to build new data centers and revamp old ones and upgrade the existing infrastructure to supply the electricity needs of data centers. This urgency highlights the need for swift action by smart grid companies and utilities that can rapidly build out the grid for the digital age.
"You have to build new transmission lines," Venturo said, adding, "You have to do new substation builds. There are just a lot of physical blockers here that are hard to overcome in the short-term."
Reverting to our "The Next AI Trade" note, we emphasized to premium subs the potential for significant investment opportunities with companies that have high exposure to infrastructure, electrification, power grid, and energy.
The companies, such as the ones in Goldman's "Power Up America" basket (Bloomberg ticker GSENEPOW), will be some of the winners over the coming years.
