The Power of AI
August 4, 2025 | Member Submitted
By David Vomund
The task of building Artificial General Intelligence is said to be on a scale similar to the Manhattan Project. Sam Altman, head of OpenAI, made reference to the Manhattan Project when his company was developing the now famous ChatGPT product (did he notice the irony in that analogy?). AI will dramatically change how we live and work.
In her book, Empire of AI, Karen Hao details her view that one consequence of AI is that the gap between the powerful and everyone else will widen. The power/influence of the largest technology companies (i.e. the hyper-scalers) will continue to grow. Meta, Amazon, Alphabet, and Microsoft will spend approximately $320 billion this year on AI. These hyper-scalers are spending more money on AI data centers than all the others combined. And they are hiring the best talent from the smaller upstart companies. Good luck to those trying to compete with them!
Their investments are working. The market capitalization of these four companies ranges from $1.8 trillion to more than $3 trillion! As a comparison, the market-cap of Walmart is $760 billion.
The gap between today’s powerful leaders that run the AI companies and to the rest of us is also widening. Those running the hyper-scalers see their wealth growing at the same time that many others struggle to pay their rising utility bills thanks in part to AI’s need for energy and water. This year, electricity bills for some 67 million customers are projected to surge by over 20 percent in 13 states from Illinois to New Jersey, the region with the most AI data centers. Closer to home, NV Energy is expanding their infrastructure to provide power for two Alphabet data centers. Will Nevada residents be competing with Alphabet for electricity?
And what about jobs? Many workers, especially entry level white color workers, are at risk of being replaced by cost-saving AI tools. Look no further than to Microsoft, which has laid off 15,000 employees this year without seeing a drop in their strong financial performance. While they say efficiency gains from AI were not a predominant factor in the layoffs, they acknowledge that over the long term AI will reshape jobs at Microsoft and everywhere else. AI will boost productivity and profits, but are most people better or worse off? I wonder.
When it comes to AI there is another kind of power: the power needed to run AI. Remember when the public was concerned that crypto currency mining required too much energy? Even Elon Musk worried about its environmental impact. We no longer hear about that. Why? The energy required for crypto currencies pales in comparison to what is needed to run Artificial Intelligence (AI) data centers.
My last article focused on the power of the AI companies and those who run them. Now we’ll cover a different type of power – the power needed to run AI. The energy required for AI data centers is expected to grow 50 percent a year through 2030 and in just three years it is expected to consume 13 percent of electricity demand. Efforts to fight global warming be damned.
This column is about investing and when it comes to investing, in AI there are the usual suspects. AI chip designer Nvidia leads the pack. Then there is Microsoft, Amazon, and Alphabet. But those are already well owned. What are the best under the radar AI stocks? That’s hard to know. In early internet days companies like AOL and Ask Jeeves seemed unstoppable … until they were stopped.
Instead of trying to choose who will benefit from AI, I prefer the more predictable approach of investing in the companies that are needed to build and power the AI data centers. Most of those stocks have already rallied, but the need for more power is in a grand supercycle.
The most direct AI power play might be GE Vernova (GEV). It is the leading provider in natural gas turbines and it also has exposure to small modular nuclear reactors. GEV is the second-best performing S&P 500 stock in 2025 so Wall Street understands its attractive position, but the general public isn’t aware, not yet. Speaking of nuclear, Vistra Corp (VST) is the second-largest nuclear operator in the U.S. and it also supplies natural gas, solar and battery storage facilities. Knowing which nuclear stock will benefit the most is difficult so I’m happy to simply own VanEck Nuclear and Uranium ETF (NLR).
One of my largest client holdings is Williams Cos. (WMB). Unlike the volatile choices above, Williams has a steady income stream and an attractive 3.5 percent yield. Williams is the prominent pipeline company that transports one-third of U.S. natural gas, which is then used to generate electricity for power centers and other uses. Last month regulators approved a Williams 400-MW natural gas-fired power plant in Ohio to serve a Meta Platforms data center. Their pipelines serve others, too.
David Vomund is an Incline Village-based Independent Investment Advisor. Information is found at www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.