On Wednesday , 22 May, the company leading the AI race – Nvidia – reported its first-quarter earnings. And they absolutely smashed investor expectations. The chipmaker beat analysts’ estimates on every single front. In fact, it was Nvidia’s most profitable and highest sales quarter ever! Now, when you investigate Nvidia’s results a little closer, it’s no surprise that the lion’s share of its record growth came from…

Data centres –

Thanks to the AI boom!

From Nvidia’s results, we can see data centre (and AI) growth is running hot…And that plays into another mega-trend that’s currently making waves.

Power is the backbone of data centres – without it, there’s no AI

Data centres serve as the critical infrastructure supporting the AI ecosystem.

By taking on that role, data centres have become one of the most energy-intensive buildings.

They can consume as much as 10 to 50 times the energy per floor space of a typical commercial office building.

Data centres in the US alone, account for around 2% of the country’s entire electricity demand.

Globally, they account for around 1% of total electricity demand, according to IEA…

And it’s no surprise.

Think about it…

You need electricity to run servers, cooling systems, storage systems, networking equipment, backup systems, security systems, and lighting.

With digital transformation across sectors gaining momentum, coupled with the rise in power-intensive AI applications, the demand for data centres will boom.

And that means, we need more electricity…a lot of it!

According to McKinsey, by 2030, data centres power consumption annually is expected to double.

So, how can the world ensure they have sufficient electricity, not just for data centres (and AI), but for homes, businesses, infrastructure etc too?

Electrification!

A mega-trend that’s gaining huge momentum across the world right now…

And one that make investors good money in the coming years.

So, what is electrification?

Well, according to the International Energy Agency (IEA), “electrification” simply means replacing technologies or processes that use fossil fuels, with electrically-powered equivalents.

This includes substituting fossil fuel energy generation with renewables such as solar plants, wind farms, hydroelectric plants, nuclear reactors, and battery storage.

However, replacing old fossil fuel plants with new renewable energy sources also means, we need modernised distribution grids.

We need to build new transmission lines, replace transformers, insert smart meter installations and smart grid technologies.

In other words, there are plenty of ways for investors to profit.

I’m talking renewable energy players, industrial companies that are experts in automation, smart metres and grids, cabling, and even mining companies who produce the key ingredients to build the necessary infrastructure.

Think copper, aluminium, lithium, nickel, iron ore. The list goes on.

These are the types of opportunities we share to South African Investor readers.

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