A-I Data Centres
Download MP3Welcome to Making Sense with Dustin Lamontagne from Research Capital. My name is Bryn Griffiths. I'm your host, and joining us is Dustin. How are you doing today?
Dustin Lamontagne:Hey. Real good, Bryn. How's yourself?
Bryn Griffiths:Fine. Thank you. AI, everybody's talking about it. The data centers, all that kind of stuff. I know you're watching it.
Dustin Lamontagne:Yeah. You you bet. It's, it's a sector that, obviously, it's it's a game changer. I think I would equate AI going on right now to, to what happened in, in, you know, 1995 when the Internet first, started exploding. You know, it it that's really the the last technology that I can remember.
Dustin Lamontagne:And I'm I'm only 50, so, I don't have, you know, can't can't go back into the 60s 70s. But I think the the Internet was the last technology that really was a game changer. And then, of course, when smartphones came out, that was a game changer, because the, our lives are now ruled by the phone. But this AI, I don't know if I'd call it a revolution, but it's going to be integrated in every single thing we do. Every single sector will be using it.
Dustin Lamontagne:It's going to be applicable. And I'm not of the opinion that it's going to be a net job, you know, net net job loser. Right. I I think just like the Internet and and smartphones, they created many more jobs than ever thought possible because what will happen is the AI will unleash the creative aspect of our economies. And in a capitalistic economy, there's gonna, people are gonna find ways to use it to create different industries that we we don't even, realize, exist at this moment.
Dustin Lamontagne:Like, 20 years ago, if you thought of, you know, that people would be renting their their apartments out as hotel rooms or driving their cars as taxis, you people would have thought you're crazy. Right? But I know. Then you have Uber and Airbnb. And so new new industries are gonna be spawned, and, that's what these data centers are all about.
Dustin Lamontagne:They they take a massive amount of energy. The the electricity demand is probably gonna double in the next 20 years because of AI. And, you know, what's that gonna look like? Well, I was doing a little bit of research. And in 2025, there's 7 to 10 gigawatts of, data centers planned.
Dustin Lamontagne:This is this is not, you know, factories, car plants, you know, this, these are specifically designed to power data centers for artificial intelligence. So to give you an idea of what a gigawatt is, a megawatt is a 1000000 watts. So tip typically, you know, for, for, for comparison sake, there's a couple of big gas, electric generation plants, they used to be coal, they were switched to gas now and they're owned by Capital Power, west of Edmonton called Genesee, Genesee 1 and 2. And, together they they produce about 1300 megawatts a day in in power. Basically, a megawatt will produce enough power for to power 300 average households a day.
Dustin Lamontagne:Okay?
Bryn Griffiths:Okay.
Dustin Lamontagne:A gigawatt, is a 1,000,000,000 watts, so a 1,000 kilowatts or, sorry, megawatts. Getting my watts watts confused.
Bryn Griffiths:I get that.
Dustin Lamontagne:But a gigawatt is a 1000000000 watts. So you're talking 7 to 10,000,000,000 gigawatts of electricity, just to power just just to power these AI data centers.
Bryn Griffiths:Crazy.
Dustin Lamontagne:Yeah, we can't really comprehend the scope, right? Because, and just to give you an idea monetarily how how that's gonna change, you know, some of the tech companies. Microsoft, just one company, has said in the next couple of years, they're gonna spend $80,000,000,000 a year building data centers to power their, their AI strategies. Wow. So we're talking about massive investments here.
Dustin Lamontagne:And, and, and it's coming. So every, every corner of our economy is going to be touched by AI. And the the reason for it is because it's going to cut costs. Even though Microsoft is spending $80,000,000,000 they're looking at, you know, these data centers powering their their profitability. Probably they have it figured out to, you know, this very small percentile, how much this is going to save them, you know, and make them.
Dustin Lamontagne:They don't, they don't spend money lightly, right? Microsoft is a pretty smart company, well managed. So it's, it's interesting. And then then you've got, you know, some interesting things going on locally, like they, they talked about building an AI hub up in Peace Country.
Bryn Griffiths:Yes. Is that the Kevin O'Leary one?
Dustin Lamontagne:Yeah. That's the Kevin O'Leary project. Right? Something like $40,000,000,000 project. Now, I don't know if that's ever gonna get shovels in the ground or what, but it just shows you the the numbers and the type of players involved here.
Dustin Lamontagne:You know, you're talking multi, tens of 1,000,000,000 of dollars in investment. And it's, it's just in its infancy. So what what are they going to be spending on AI, you know, 10 years from now, 20 years from now? Wow. What industries will it spawn?
Dustin Lamontagne:Right? I think you can look into the crystal ball and maybe make some predictions, right? Call centers are probably dead in the water. Coders are probably dead in the water. I wouldn't want to be going into coding right now.
Dustin Lamontagne:That's probably not a, because from everything I read is that AI is going to be able to do its own coding. So, and if you call for instance, a company like Expedia, if you if you contact them online, you're not talking to a person now. You're actually talking to a bot. So I know that's all AI technology. And it's really good.
Dustin Lamontagne:They can they can talk to you like there's a person on the other line.
Bryn Griffiths:How much longer are we gonna be doing this podcast, you and me, live and in color? You know?
Dustin Lamontagne:Well, I've actually been looking into, some different AI, replacements for you, Brynn, but I haven't found anything as of yet.
Bryn Griffiths:That's a relief. Yeah. It's pretty crazy there. So do you are you finding that people are nervous simply because they don't know enough about
Dustin Lamontagne:it? No. Not not really. Nervous is is not the word. I think people are just asking, okay, you know, how how do we how do we invest in this?
Dustin Lamontagne:Right? And I've admittedly, you know, missed the boat on a couple companies only because I thought they were way too expensive. And here, they've just kept going up like Nvidia. But I have a hard time paying, you know, 120 times forward earnings for any company, and I don't care what it is. Right.
Dustin Lamontagne:So I I've I I just can't knowingly overpay for for a stock. At some point, that's gonna correct. Unless, you know, the profitability of of a company like NVIDIA just goes into the stratosphere and it and it starts to equate, the numbers equate and the margins equate to their current share price. But to me, it's like 75% overvalued. And some of those tech companies that are look like they're drastically overvalued right now have sort of put the S and P 500, I think, into bubble territory.
Bryn Griffiths:Right.
Dustin Lamontagne:If you look at historical PE ratios, that's price earnings ratios on the S and P 500, it's about 12 to 15 in that range. Right now, it's sitting at about 34, as of the date we're recording. So if it gets over 30, usually within a a year or 2, you have a pretty significant pullback. This is the 1st year of Trump's presidency, so I don't expect a a pullback, but I'm I'm not, you know, you can't predict the market in the short term. It's it's like a casino.
Dustin Lamontagne:Right?
Bryn Griffiths:So Hey. So how much reading do you have to do? Because you do a lot already, and you're watching things constantly. But now AI has come on board. I know what it's done for my business.
Bryn Griffiths:I I've gotta watch it constantly because you gotta stay up with the times. You at least got to be aware of what's going on.
Dustin Lamontagne:Yeah. I do 2 to 3 hours a day of of, reading specifically toward towards, you know, the the investment business. And then probably, you know, stuff stuff that I'm reading on my phone and whatnot, I don't even realize it's probably another hour or so. Right. I just read articles all day long.
Dustin Lamontagne:That's that's the majority of, my my job. Right? Because I have to be up to speed on what's going on with with the different sectors that I'm involved in. So
Bryn Griffiths:So so if somebody has an AI question, they can get ahold of you. Right?
Dustin Lamontagne:Yeah. You bet. If, they wanna know the difference between a megawatt and a gigawatt, I'm I'm the guy because I've been researching it for the better part of, you know,
Bryn Griffiths:last year. Spinning there when you were trying to explain it to me. I'll have to send you an email. So what's the best way to reach you?
Dustin Lamontagne:On my cell phone, 780-905-7729, or, email is dlamontang@researchcapital.com.
Bryn Griffiths:Perfect. Thanks for trying to get me, on side here a little bit, and it's a fascinating topic. So, I look forward to talking to you, over a coffee on that one.
Dustin Lamontagne:Yeah. You bet, Brynn.
Bryn Griffiths:Well, that's it for today. We'll have more helpful hints coming your way on our next episode. And don't forget, all opinions expressed are solely Dustin's and do not reflect those of Research Capital. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Research Capital may maintain positions in the securities discussed in this podcast.
Bryn Griffiths:Thanks for listening to Making Sense. Have yourself a great day.
