Minuk's Musings and AI Showing Up

When you think about the companies that are set to benefit from the proliferation of AI, (artificial intelligence) you probably first think about the major tech companies.

 

But the potential reach of this technological advancement is being felt far wider and is showing up in some interesting places.

 

As a fan of the NBA, I was intrigued by a story on CNBC today outlining how the NBA is using AI to optimize their game schedules for upcoming seasons. The result will be minimizing total travel and maximizing rest days for the players. CNBC Clip: AI Transforming Sports Landscape

 

 

Even Wingstop, the fast-food joint, said they are benefiting from AI as they are using it to better manage the phone lines. This is resulting in a 5%-10% increase in deliveries, so says a Dynamic Funds portfolio manager at a presentation this week.

 

According to BMO’s Utilities Analyst, Ben Pham, another company that is being impacted by the growth of AI is the boring, old, electrical utility company, Fortis.

 

 

Hyperscalers, like Amazon and Google, are building massive new data centres to house computers with AI-capable chips like those manufactured by NVIDIA.

 

One chip requires one household’s worth of energy. NVIDIA plans to sell 2M chips this year alone; equivalent to the energy needs of the city of Houston.

 

Much of the energy is used to cool the computers so they don’t overheat and melt as they collect and compute massive amounts of data.

 

An enhanced energy grid is absolutely essential.

 

So, where are these new data centres going to be built?

 

Ben Pham says he is hearing that Arizona and Virginia will be first in line.

 

Fortis owns major electrical utility infrastructure all over Arizona which represents 30% of their business. They are telling us that the expected demand for new energy infrastructure and for the upgrading of existing infrastructure is more than what they can take on alone. This all equates to growth prospects for a company more so known by their investors for their boring, steady dividend stream.

 

Tech companies, the NBA, Wingstop and Fortis are not the only ones mentioning AI. In fact, every S&P 500 company is talking about it. And with such hype, investments must be made with extreme caution.

 

Here is a chart showing how often the term “AI” has been mentioned on earnings calls as of late.

 

Hope you have a great weekend.

 

Rich

Investment Advisor