Back in the early 1990s, I dipped my toes into the investing world. Just when I thought I was getting the hang of it, the dot-com bubble burst onto the scene.
For years, I diligently studied the art of valuations and combed through financial statements, only to witness companies without revenue skyrocketing by 100% in a single day. It was a baffling time that left many, including me, scratching our heads.
Since then, whenever a major trend emerges—be it crypto or AI today, or marijuana before that—instead of trying to guess which company will dominate, I focus on the “pick-and-shovel plays.” These are the companies poised to profit, no matter which individual player comes out on top.
The idea of “pick-and-shovel plays” dates back to the 19th-century gold rush. While a few prospectors did strike it rich digging for gold, the real fortunes were made by those selling essential tools like picks and shovels to the miners.
In the current AI wave, my favorite pick-and-shovel opportunity lies in nuclear energy. These are the industries supplying the crucial infrastructure AI depends on, ensuring their success regardless of the broader outcome in AI development.
Google’s CEO, Sundar Pichai, has highlighted AI’s potential to transform every product across every business. With Goldman Sachs predicting that Big Tech will funnel over $1 trillion into AI, it’s clear this trend has captured the attention of global powerhouses.
In fact, industry giants like Amazon and Google aren’t just dabbling in AI; they’re planning to construct their own nuclear power facilities to fully harness AI’s capabilities within their operations.
This move speaks volumes about the direction they’re heading.
While there’s debate about the pros and cons of nuclear energy, including arguments about its safety and cost, my research has led me to believe it’s the most viable option for meeting AI’s energy requirements and driving its future advancements.
For starters, when we examine the fatalities per unit of electricity produced, nuclear stands near the very bottom. Solar energy remains the safest, but nuclear isn’t far behind, with a rate of just 0.03.
Nuclear power also takes up far less land than any other primary energy source. A single nuclear plant can churn out as much power as 200 windmills, which require vast spaces.
Its efficiency, however, is what truly sets nuclear power apart. It can generate over twice the energy of any other source.
Perhaps this is why there’s broad support for boosting nuclear capacity, extending from both sides of the American political spectrum to various governments across the globe.
It’s quite unexpected to see America, the UN, Donald Trump, and Joe Biden all align on an issue, but that’s the reality when it comes to nuclear energy.
As colossal sums are directed toward nuclear advancements in the years ahead, investors who seize this opportunity might find themselves reaping substantial rewards.
