Welcome back to Market Movers, the opening bell live from the New York Stock Exchange.
While all digital activity comes down to energy.
This means AI, cloud, crypto, apps, and more need physical electricity generation as well as grid infrastructure.
We've seen plenty of AI deals this year and a shortage of money probably won't be an issue with countries such as the US and China going all in on the AI race, but a shortage of available. energy could be a problem.
Transformers, copper wiring, and generation assets are providing the real electrons needed for artificial intelligence, and that means steel, copper, labor permitting, as well as time are all needed for the AI race.
Well joining me to weigh in at the New York Stock Exchange this morning is Jeff Gitterman, CEO of Gitterman Asset Management.
So Jeff, great to have you here.
Thank you so much for joining me.
Thanks for having me.
Break this down for us and explain why energy is so crucial when it comes to artificial intelligence.
I mean, if we think about it, the computing power has increased by about 360,000% over the last 10 years, and yet our energy available usage has only increased by 1.6%.
And the more these chips come online, they take more and more and more power, and each generation of new chips.
Takes more power.
The bigger problem that we have, we just can't get enough energy into this grid to drive the data centers that are already being built today.
We have data centers that are literally standing that are not in use yet because they didn't secure power agreements.
They didn't secure the water that is needed and available, and this is even more troubling in places like Phoenix, which is already starved for water.
Yeah, and water is a crucial part of this as well in addition to energy, but when we're talking about the energy component, where is it going to be coming from?
You know, if you look in China, China is building not just energy from all kinds.
They're building coal, they're building nuclear, they're building the most solar and renewable of any country.
Actually they're building more solar than all the countries in the world combined.
China is putting more solar fields online.
In the US, our grid is already at max.
Capacity.
So like you said, we need transformers.
We need natural gas turbines.
We need the steel and the copper and everything to build these data centers out and to build the wiring to get to the power in the data centers.
So we're literally running at full speed on this train towards a brick wall of not being able to have the power to support the revenue growth target.
That are built into these companies.
I think it's why you saw Oracle take a huge spike up on the deal with ChatBT, and since then it's down 35% because it doesn't have the power.
ChatBT is asking for so much power, more power than some countries over the next two years to be able to keep up this race.
Where are they going to get the utilities to provide that power is an unknown at this point and no one seems to be.
Digging that much into it, it's baffling to me because it's easy to track through that if you have this much data center demand built into your revenue stream, do those data center demands or already signed contracts have the energy contracts and the water contracts to be able to provide it?
The majority of them actually don't, which is astonishing.
Yeah.
And also Jeff, one thing I do want to ask you is what are the implications for Americans out there when it comes to energy costs?
We've already seen doubling and tripling of energy costs.
We've already seen a lot of dirty pollution coming off of data centers.
They're having problems in Louisiana right now.
It's been in the paper from some data centers.
Facebook is building the largest data center down in Louisiana that exists, I think, in the US today.
Where is that land coming from?
What is that land doing to people, especially Lower income areas that already can't afford rents and can't afford home ownership, so you're taking up the land, you're pulling the power, and regardless of what anyone says, it's either creating power intermitttencies for the local communities or it's creating a dramatic increase, 23 times increase in power prices, and people, I mean this administration's blaming the prior administration.
Energy costs, but at the end of the day you can't be building this much in data centers have this much energy demand with a limited grid and not have prices go up and spike, especially these utility companies are catering to the data centers a lot because it's huge contracts for them.
So who suffers from that?
The local community tends to suffer in that.
Yeah, and speaking of which for these corporations, it is about the bottom line.
So what is a good way to actually go about doing this in a sustainable manner?
The best way is to slow down how much we're doing currently and rebuild the grid systematically.
It's kind of like the old gold mining.
You had gold miners rushing out to San Francisco to dig for gold, but they'd get there and they didn't have picks and they didn't have shovels and they didn't have all the equipment and tents that they needed.
So all of a sudden slowly, slowly that demand built up where companies would go out there.
They would start selling picks and shovels right now instead of pouring all this money into future demand of data centers or driving the price of these tech stocks up so high, a lot of that money should be going into reinstalling grid and infrastructure, and that's where we've been talking about for a couple of years now that we need to invest in the infrastructure and we need to do that sustainably.
We need to look at renewables, obviously you need gas for peaker plant. because we need 24 hour service, but we need battery storage to get better, so we need big investment in battery storage, and we need to be deploying a lot of renewables, not at a time right now where we're actually cutting and freezing the building of renewables out.
Yeah, and Jeff, you mentioned China earlier and you told us what's happening on the ground here in the US, but are there other nations that are doing this better when it comes to artificial intelligence?
Energy investment right now there's 2 dogs in the race, so to speak, and that's China and the US, Europe, Europe is still way behind.
They're doing a lot better on renewables and sustainable infrastructure and building that out.
They're building their nuclear that they shut down too quickly.
They're starting to turn back on.
We're seeing that in the US right now too, but the race between China and the US was always kind of figured on the fact that The US had better chips and better computing power, but China has unlimited energy, and for some reason the US kept thinking they could keep winning on chip and compute power, but you can't if you run out of energy.
So China right now has a distinct advantage because they're pouring energy we call it the additional economy.
They're adding energy from all different sides.
The US should be adding.
If they want to win this race, I don't know how they do it sustainably, but they should be adding as much energy as possible, as cleanly as possible right now.
That's not happening.
Well, Jeff, this is definitely an area we'll continue to monitor.
So thank you so much for joining us today and as always, thank you so much for all of you.
Thanks for having me.
