The AI Investment Boom

Reading this makes me willing to bet that this capital intensive investment boom will be similar to other enormous capital investment booms in US history, such as the laying of the railroads in the 1800s, the proliferation of car companies in the early 1900s, and the telecom fiber boom in the late 1900s. In all of these cases there was an enormous infrastructure (over) build out, followed by a crash where nearly all the companies in the industry ended up in bankruptcy, but then that original infrastructure build out had huge benefits for the economy and society as that infrastructure was "soaked up" in the subsequent years. E.g. think of all the telecom investment and subsequent bankruptcies in the late 90s/early 00s, but then all that dark fiber that was laid was eventually lit up and allowed for the explosion of high quality multimedia growth (e.g. Netflix and the like).

I think that will happen here. I think your average investor who's currently paying for all these advanced chips, data centers and energy supplies will walk away sorely disappointed, but this investment will yield huge dividends down the road. Heck, I think the energy investment alone will end up accelerating the switch away from fossil fuels, despite AI often being portrayed as a giant climate warming energy hog (which I'm not really disputing, but now that renewables are the cheapest form of energy, I believe this huge, well-funded demand will accelerate the growth of non-carbon energy sources).

> but now that renewables are the cheapest form of energy, I believe this huge, well-funded demand will accelerate the growth of non-carbon energy sources

I think the renewables would have been built at the same rate anyway precisely because they're so cheap; but nuclear power, being expensive, would not be built if this bubble had not happened, and somehow nuclear does seem to be getting some of this money.

I want to point out to anyone who's interested in the nuclear angle that even before the AI data center demand story arrived, the uranium market was facing a persistent undersupply for the first time in its many decades of history. As a result, the (long-term contract) price of uranium has been steadily rising for years: https://www.cameco.com/invest/markets/uranium-price

After Fukushima (https://news.ycombinator.com/item?id=41768726), Japanese reactors were shut down and there was a glut of uranium available in the spot market. Simultaneously, Kazatomprom flooded the market with cheap ISR uranium. The price of uranium fell far below the cost of production and the mining companies were obliterated. The few miners that survived via their long-term contracts (primarily Cameco) put their less efficient mines into care and maintenance.

Now we're seeing the uranium mining business wake up. But after a decade of bear-market conditions the miners cannot serve the demand: they've underinvested, they've lost skilled labor, they've shrunk. The rebound in uranium supply will be slow, much slower than the rebound in demand. This is because uranium mining is an extremely difficult process. Look at how long NexGen Energy's Rook 1 Arrow mine has taken to develop, and that's prime ore (https://s28.q4cdn.com/891672792/files/doc_downloads/2022/03/...). Look at Kazatomprom's slowing growth rate (https://world-nuclear-news.org/Articles/Kazatomprom-lowers-2...), look at the incredible complexity of Cameco's mining operations: https://www.petersenproducts.com/articles/an-inflatable-tunn...

Here is a discussion of the uranium mining situtation: https://news.ycombinator.com/item?id=41661768 (including a very risky method of profiting from the undersupply of uranium, stock ticker SRUUF, not recommended). Note that Numerco's uranium spot price was put behind a paywall last week. You can still get the intra-day spot uranium price for free here: https://www.yellowcakeplc.com/