Out with the Old, In With the New

We made it.

Once again we find ourselves in the trading doldrums; that special week that comes each year where most rational people sit back and enjoy time with their family and friends. 

Wherever you find yourself this chilly Christmas eve, I’ll bet the market is the last thing on your mind… Don't worry, you’re not the only one. The week between Christmas and New Years tends to be the quietest trading days of the year. In fact, normal trading volumes are typically cut in half, sometimes more than that. 

Not that I can blame anyone, mind you. 

Far be it from me to break tradition, so in honor of this soft lull in the market, let’s take a few moments and look at one of the biggest stories to break out in 2024. 

Not only can it offer a little insight into a market trend that has dominated the news cycle all year, it will also give us a nice little headstart in the new year.

Nowhere else will you find a bigger story in the market this year than artificial intelligence. 

If the release of ChatGPT back in November of 2022 was a pivotal moment in history for AI, then its rapid adoption since has been arguably the most important market driver in 2024. 

We’re talking about a market that, despite the incredible growth we’ve seen to date, is STILL in its early stages. Worth upwards of $200 billion in 2024, the AI market is about to hit the accelerator over the next few years and projected to potentially contribute nearly $16 trillion to the global economy by 2030. 

It’s an unstoppable force that will dramatically boost productivity in nearly everything it touches… or is it?

Whenever I find something that feels almost too good to be true, it usually is; the widespread adoption of AI technology could easily transform the productivity and GDP of economies all over the globe — but there is one serious hurdle to overcome before it does. 

Can you guess what it is?

What’s interesting is that we can take all the guesswork out of it. You see, we already know what the problem is: Power. That pesky little thing that without it would immediately wipe away any and all growth prospects for AI from here on out.  

Look, we’ve been talking about AI’s power crisis all year. I mentioned as early as last March that the demand for power was one thing that could bring AI crashing down.

At the heart of that never-ending thirst for electricity to support AI workloads are the data centers that are popping up all over — accounting for nearly three-quarters of AI’s power demand going forward. 

Globally, demand for just these data centers is expected to rise between 19-22% annually between now and 2030, hitting an annual demand of up to 219 GW. 

Here in the U.S., the EIA projects that we’ll use an eye-popping 4,099 billion kilowatt-hours this year, and hit another record for power demand in 2025. 

We’re going to face some hard truths in 2025 when it comes to the U.S. power grid, not the least of which is a dire need for consistent, reliable baseload power. 

But here’s the interesting part…

Big Tech has already shown us their cards. Amazon tipped their hand last October after announcing its deal with Dominion to develop small modular reactor technology; Google did the exact same thing in their deal with Kairos Power to buy 500 megawatts from several SMRs; Microsoft followed when it announced it was reviving the Three Mile Island nuclear plant for $1.6 billion.

This isn’t speculation, dear reader… This is where they’re heavily investing to meet their future power needs. 

But the real key to unlocking AI’s full potential isn’t necessarily in building tomorrow’s SMRs, it’ll be fueling them. 

I think it’s time you checked out how they’re going to do it.