Three top tech companies announced that they will create a new company called Stargate to push AI in the United States. The companies are OpenAI, SoftBank, and Oracle.
The CEOs showed up at the White House and stood alongside President Trump to announce the proposal. Trump called it the “largest AI infrastructure project in history.”
The companies will invest $100 billion in the project to start, with plans to pour up to $500 billion into the project. Trump said it would create 100,000 jobs.
Larry Ellison of Oracle fame said the group’s first, 1 million-square-foot data project is already being built in Texas.
AI leaders have for months been sounding the alarm that more data centers — as well as the chips and electricity and water resources to run them — are needed to power their artificial intelligence ambitions in the coming years.
The driving need behind this idea is infrastructure. These data centers need a tremendous amount of power in the form of electricity. Eventually, these data centers will be powered by nuclear but that is many years off. Over the next five or so years they will have to be powered by natural gas which is abundant in Texas thanks to fracking in the Permian Basin.
Companies that own pipelines as well as those that produce electricity and their infrastructure will do well. I am currently putting the final touches on a report for natural gas pipeline plays that make their money on volume.
Glass
Take Corning (GLW) for example. Here is a company that makes glass products including its cutting-edge GenAI fiber optic cables system which connects all of those servers in the server farm.
The share price just broke out.
The company announced that second-quarter results would be better than expected due to its optical connectivity products used for Generative AI. In the past, the company hasn’t been able to leverage its $3 billion excess capacity due to a lack of demand. The driving need for AI data centers is quickly changing the landscape.
Look for margins to expand going forward. The $3 billion in new sales could add $900 million in EBITDA. It looks like Corning is in the right place at the right time. I’d be a buyer of GLW on a pullback to around $51 a share.
Yahoo!Finance puts its five-year PEG ratio at 0.66 which is cheap — well below our 1.0 rule of thumb. Corning should provide safe consistent growth for the foreseeable future.
All the best,
Christian DeHaemer
Outsider Club
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