The Race For AI Leadership Will Have Losers Soon
Huge Tech Companies Need More Money
Where Will Electricity Come From
A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here.
The headlines won’t stop. The most recent is that Amazon’s (NASDAQ: AMZN) Jeff Bezos plans to raise $100 billion for a new AI Manufacturing Fund to buy manufacturing facilities and update their efficiency with AI. Alibaba and Tencent lost $66 billion in market capitalization in one day due to failed AI plans. OpenAI will pivot again toward a “superapp” to attract more business and software customers. The effort to build AI data centers continues to explode. The New York Times reports that the AI giants have begun building off-grid data centers powered by their own energy sources. These companies are desperate for electricity and cannot wait for traditional energy sources to solve the problem. And, these structures will cause significant air pollution.
Among the largest mega AI companies, including Meta (NASDAQ: META), Amazon, Google, and OpenAI, plans call for investing well over $500 billion in AI investment this year. To stay competitive, the number will need to grow. They don’t have enough cash on their balance sheets, so they are turning to the financial sector, which seems happy to gamble on providing funds for infrastructure.
Read: Data Shows One Habit Doubles American’s Savings And Boosts Retirement
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
And, AI guru Jensen Huang of Nvidia (NASDAQ: NVDA) expects $1 trillion in chip sales for his most advanced products through 2027. And chips are only one part of the chain of investments needed to reach the top of the AI pyramid and stay there.
One aspect of chips, software, and the customer chain is that data centers will eventually be as large as Manhattan and will have the power to serve the equivalent of hundreds of thousands of homes. That is not in aggregate. That is the power of one huge data center. The politics of building these could influence the mid-term elections, and potentially the race for president. Trump has already said he plans to ensure residential electricity prices do not soar. He calls it the Ratepayer Protection Pledge and says many AI companies have already signed it. That does not mean the pledges will be kept.
One aspect of the staggeringly fast, large-scale buildout of the AI future is that there will be winners and losers. This is already being reflected in public company stock prices and in the sums that private companies, including Anthropic and OpenAI, can raise. And, it relies on whether the private companies can launch IPOs to raise even more capital. Some in both the tech and financial industries believe an OpenAI IPO could value that company at $1 trillion. That is equivalent to Berkshire Hathaway’s (NYSE: BRK-B) market cap and would make OpenAI the 10th- or 11th-largest market-cap stock in the world. Some industry experts believe OpenAI is not worth that much, and an IPO will be a failure.
