The world’s richest man just outdid himself, again.
Last year, Elon Musk and his xAI team turned an empty warehouse the size of 13 football fields into the largest artificial intelligence (AI) training cluster in the world in just 122 days.
The average American family home takes 234 days to build. Elon and xAI built an AI fortress the size of a small town in about half the time.
Nvidia (NVDA) CEO Jensen Huang said builds like this usually take three years!
But Colossus 1 was just the warm-up. As I write, Elon and his team are building Colossus 2, which is on track to be the new world’s largest AI data center.
Colossus 2 will scale to about half a million AI chips when fully built. It will consume as much electricity as the entire city of Miami.
For the last two years, everyone in AI obsessed over chips. Elon Musk joked that GPUs were “harder to get than drugs.”
It’s electricity.
It all comes back to the AI law I told Disruption Investor members about in 2020.
The bigger the AI model, the better the results.
That’s why AI models just keep getting bigger and bigger.
And this year alone, big tech will spend $350 billion+ building new AI data centers.
Source: The Wall Street Journal
In one year, AI infrastructure spend has grown to rival the entire Apollo program or the Interstate Highway System, when adjusted for today’s dollars.
Back in 2006, Google (GOOG) spent $600 million on its first big data center in Oregon. At the time, it was a huge deal.
Fast-forward to today. OpenAI, Oracle Corp. (ORCL), and SoftBank are spending almost 100 times as much—$500 billion—on their “Stargate” project. Stargate will hoover up enough energy to power a city the size of New York!
Yesterday’s megaprojects were highways and dams. Today’s megaprojects are digital cities of silicon and steel, fed by rivers of electricity.
That was just to keep AI running.
It also inked a deal to help restart a reactor at the iconic Three Mile Island plant in Pennsylvania.
Meta Platforms (META) went a step further. It’s launching its own energy trading arm to manage the power costs of its massive data center footprint.
At this scale, there’s no choice. To keep AI alive, big tech has to build, buy, or control its own power.
I wouldn’t be surprised if Microsoft, Meta, Google, and Amazon (AMZN) become some of America’s largest utilities within a decade.
This is how disruption works. It redefines entire industries. Oil companies became refiners and gas station operators. Railroads became real estate giants. AI companies are becoming power companies.
And as investors, we want to own the companies enabling this disruption.
Utilities.
For decades, they were boring, slow-growth business. The “anti-disruption” stocks.
But over the last year, America’s largest utility stocks have been on fire.
NRG Energy (NRG)... up 82%.
Vistra Corp. (VST)... up 70%.
And Talen Energy Corp. (TLN) has rallied 116%.
All three are beating Nvidia (44%) over the same timeframe.
These “boring” power providers are soaring because AI companies are desperate for power.
Power is such a bottleneck these days, the only reason Elon was able to get Colossus built was because he brought his own power.
xAI stacked natural-gas turbines on-site in Memphis. Then it acquired a decommissioned power plant in nearby Mississippi to get temporary approval to run them without a permit.
But have you looked at its chart lately?
Record highs. Tripled in the past five years:
Most people know Caterpillar for bulldozers and backhoes. But it’s also the world’s biggest maker of backup power systems for data centers. Its Electric Power business sells the big yellow generator sets (“gensets”) data centers rely on to never go dark.
That unit has quietly become Caterpillar’s fastest-growing business. And it’s turned boring ol’ CAT into an AI stock.
It doesn’t work without concrete, steel, and boring ol’ power.
The bottleneck has moved from chips to electricity. That’s fueling the next wave of winners.
“You’re telling me Caterpillar’s an AI stock?”
In 2025… yes!
But in our flagship Disruption Investor advisory, we have an even better way to profit...
In our latest issue, we recommended three leading AI companies. They make up our “phase 2 ETF.”
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Stephen McBride
Chief Analyst, RiskHedge