AI is upon us and we’re in the early stages watching this quickly evolve; it certainly is going to have a profound effect on us all.
I am going to outline with the help of AI some favorite ways to look at AI as an investor in four areas I feel worth considering. I chose the thesis and asked AI how importanteach of these are to AI. (Perplexity, a favorite AI Assistant, wrote theresponses in italics)
Data Centers: Datacenters are absolutely essential for artificial intelligence, serving as the high-powered backbone that enables the development, deployment, and daily operations of AI applications. Without data centers equipped for advanced AI, the massive computational needs and scale of modern AI would not be possible.
Energy: Energy is critically important to AI, as powering the large-scale computations and data processing inherent to AI requires significant electricity consumption. AI hardware alone in 2025 is estimated to demand between 46 to 82 terawatt-hours (TWh) of electricity annually, comparable to the energy consumption of entire countries like Switzerland or Finland.
Chips: Chips, specifically AI chips such as GPUs, FPGAs, and ASICs, are critically important to artificial intelligence because they provide the immense computational power necessary to efficiently train and run AIalgorithms. AI chips are tens to thousands of times faster and more energy-efficient than general-purpose CPUs for AI tasks, enabling cost-effective and scalable AI development and deployment. Without these specialized chips, training advanced AI models would be prohibitively expensive and time-consuming, and inference (applying AI models) would be much slower and costlier.
AI Assistant: AI assistants, also called conversational AI, are very important to AI because they serve as the primary interface between humans and AI systems, enabling natural, efficient, and scalable communication and task execution. They use large datasets, natural language processing, and machine learning to understand, respond to, and learn from human interactions. This capability makes AI assistants essential for improving user engagement, customer service, automation, personalized experiences, and data-driven insights.
These are the four areas we are targeting for AI investments and have already established some stakes here. We all should be somewhat educated on how AI evolves to AGI and ASI, and once educated, we will probably be somewhat alarmed.
The younger generation of money managers and VC’s have not experienced the stock market ‘routs’ of 1975, 1982, 1987, 1990, 2000 or 2008 where there were significant market corrections. Since the 2008/9 correction, the most significant market correction we have experienced was during the pandemic with a quick 34% decline followed by a swift market recovery. The buy-the-dip strategy has worked for quite a while now and I wonder how much longer it takes before we have a serious bear market as buyers move to the sidelines after getting burned buying a dip.
Innovation across the spectrum continues at an amazing pace. At some point, VC funding will likely not beas robust as it is currently, causing companies to resize operations or run outof funding options if conditions deteriorate, especially if a recessionary bearmarket looms. Private equity companies havehad lackluster opportunity for liquidity events and the IPO market, whileshowing some signs of life, is still tentative and unreliable for emerginggrowth companies.
Housing related companies will do well when residential home sales volumes increase. Potential catalysts include lower mortgage rates, improving home affordability, and an eventual rising inventory of homes for sale. We have investments in high quality companies whose revenues will benefit from increased housing-related activity. These include furniture, mortgage originations (along with refinancings), and home/commercial property sales. Growing sunbelt areas create needs for essential services like grocery, medical, office, and dining/entertainment.
Crypto and blockchain investments have regained their charm to some degree and the benefits of blockchain technology to a robust AI ecosystem seem worthy of consideration. Blockchains can validate large numbers of transactions accurately, and AI as it matures will need that functionality.
After the COVID correction in 2020 the market continues to be near all-time highs. October can be a tricky month. There are still new value investments on our radar and yet raising cash is also on our minds.
