AI Picks and Shovels, Post-Bubble
brad@brad
−10.8%
since Oct 8
The idea
I think the AI boom is partly a bubble, but the spending on compute, buildings, and power keeps flowing regardless of which individual AI companies survive. So I skip the model makers and software subscriptions and instead own the layers that get paid either way: challengers to the dominant chipmaker, the builders and coolers of data centers, and power and grid infrastructure, with a smaller stake in nuclear plays and companies helping businesses actually adopt AI.
What it owns
- Data centers are hitting power limits, so suppliers of turbines, grid equipment and reliable generation capture the spending surge. · GE Vernova Inc.It makes the gas turbines and grid equipment that new data center power depends on, anchoring the power and grid sleeve as turbine orders stay booked years ahead., Constellation Energy CorporationIt operates the largest nuclear plant fleet in the US and contracts its power to technology companies on long-term deals., Eaton Corporation plcIt supplies the electrical equipment that every data center and grid upgrade requires, a cash-flowing anchor as utility and data center orders grow., Cameco CorporationIt mines and processes uranium for nuclear power, capturing value whether large plants or small reactors become the dominant energy source., BWX Technologies, Inc.It builds reactors for the Navy and supplies parts for commercial reactors, offering steadier exposure to nuclear growth from a company already winning government work.30%
- Custom cloud chips and networking suppliers gain share as data center spending spreads beyond a single dominant chip maker. · Broadcom Inc.It designs custom AI chips for major cloud companies, capturing revenue when they build their own processors instead of buying from one supplier., Advanced Micro Devices, Inc.It is the most direct challenger to dominant AI chip leadership, winning significant data center customers with its processors., Arista Networks, Inc.It sells the network switches that connect AI servers together, winning orders regardless of which chip supplier dominates the market., Marvell Technology, Inc.It builds custom AI chips and optical components that move data inside data centers, expanding alongside cloud company infrastructure spending., Astera Labs, Inc.It makes the chips connecting processors and memory inside AI servers, winning across any chip supplier's platform., Credo Technology Group Holding LtdIt makes the chips and cables moving data between AI servers, a smaller company focused on data center customers with exposure to major cloud buyer concentration.27%
- Every data center needs builders, electrical contractors and cooling systems regardless of which AI company leads the market. · Vertiv Holdings CoIt sells the power and cooling systems inside data centers, the essential HVAC layer that every facility needs as construction continues., Quanta Services, Inc.It builds the power lines and substations that connect data centers to the grid, capturing revenue from both construction and power infrastructure growth., Comfort Systems USA, Inc.It installs HVAC and electrical systems as a contractor, with a growing share of work focused on data center projects., Modine Manufacturing CompanyIt is a smaller cooling equipment maker shifting toward data centers, the kind of incumbent that gains by focusing on AI infrastructure buildouts.21%
- Revenue flows to companies that help ordinary enterprises actually deploy AI into their operations, not just experiment with it. · International Business Machines CorporationIt helps large companies integrate AI into the legacy systems they already operate, growing its consulting and hybrid cloud business., Accenture plcIt gets paid to help enterprises actually deploy and use AI in their operations, capturing integration revenue as AI work grows faster than it reduces other consulting., Palantir Technologies Inc.It sells software that makes AI work inside organizations and government agencies, moving beyond pure research toward operational deployment.10%
- A small, speculative position that small modular reactors become a viable power source for data centers in the coming years. · Oklo Inc.It builds microreactors designed to power sites like data centers directly, staying small as a speculative position while pursuing regulatory approval and customer contracts., Centrus Energy Corp.It makes enriched fuel for advanced small reactors, capturing value if small nuclear builders succeed while maintaining government support., NuScale Power CorporationIt has a small modular reactor design already approved by federal regulators, staying small while it converts that certification into customer orders.6%
- Cash6%