AI is creating a new gold rush. Companies are investing heavily in the energy sector. AIPO ETF?
**Is investing in ETF like Aipo ( Defiance AI & Power Infrastructure) smart move?**
Due to the rapid development of artificial intelligence, companies across a wide range of industries from tech giants to automakers are rapidly expanding into the energy sector. The race for electricity, which has become a critical resource for AI technologies, has turned into a modern-day gold rush, creating enormous financial value but also significant risks if demand cannot be met, Axios reports.
Electricity, long considered a cheap and readily available commodity, is suddenly becoming one of the most valuable strategic assets in the business world. “Today, everyone is either dependent on energy as a key resource or sees it as a massive business opportunity,” says Brian Janous, who 15 years ago became Microsoft's first employee focused on energy and is now the co-founder of Cloverleaf Infrastructure, a company that develops data centers.
**Ford’s Move Into Energy**
Earlier this month, Ford announced an expansion into energy storage systems designed for data centers and other large-scale power consumers. To support this effort, the company launched a new subsidiary, Ford Energy, in response to what it describes as “enormous demand for domestic energy storage solutions.”
Investors are increasingly rewarding companies that are shifting toward energy solutions needed to support artificial intelligence or strengthening their existing efforts in the sector. Several recent examples highlight this trend.
After launching its $2 billion energy business, Ford’s stock reached its highest level in three years. Meanwhile, Bloom Energy, long considered a niche player with technology for rapid on-site power generation, has seen its share price rise by more than 1,200% over the past year.
**Massive Orders**
Geothermal startup Fervo Energy, whose technology was once viewed as highly speculative, experienced explosive growth after going public earlier this month as Wall Street searches for new electricity sources to power data centers.
GE Vernova reported $2.4 billion worth of data-center-related electrical equipment orders in the first quarter alone, exceeding the total it received during all of last year. Its stock has gained roughly 60% this year.
“The energy behind artificial intelligence is invisible to most people, but we're talking about enormous amounts of power,” said Andy Power, President and CEO of Digital Realty, one of the world’s largest data center companies.
“For those of us who have been building digital infrastructure for more than 20 years, this isn’t new,” Power told Axios. “What is new is the speed at which everything is happening. Energy companies are overwhelmed with requests and now have to determine which projects are truly serious.”
**The Other Side of the Coin**
However, beneath the surface of soaring stock prices, significant challenges are emerging. Public opposition to new data center construction is growing stronger, raising the possibility that some of the largest planned projects may never be completed.
“Many people will lose a lot of money in this business,” Janous believes not because of insufficient demand, but because too many massive projects are competing for the same demand. He cited a controversial project in Texas, promoted as the world’s largest data center, as well as another proposal in Utah backed by well-known investor Kevin O’Leary.
According to data from Heatmap Pro, the number of data center projects canceled due to public opposition reached a record high in the first quarter of this year. The analysis estimates that more than $40 billion in investments have been halted.
“The situation is getting worse,” Janous said regarding public resistance, sounding far more pessimistic than he did in an Axios interview in February. He identified water consumption, air pollution, and noise as the primary concerns of local communities.
Solutions Are Creating a New Wave of Startups
Yet every gold rush creates new business opportunities alongside its challenges. The AI-driven energy race has spawned a new generation of startups developing products for data centers, some of which may help address the concerns of local communities.
Microsoft, Google, Amazon, and Meta have partnered with nonprofit investor Elemental Impact to accelerate the development of new technologies by using data centers as testing grounds. These technologies include advanced cooling systems, energy storage solutions, and low-carbon construction materials.
If these startups successfully scale their businesses, their solutions could reduce public concerns surrounding data centers, particularly regarding water usage and air pollution.
For decades, energy was merely an input cost. In the age of artificial intelligence, it is becoming the final product.