Biocomputing Is Here, and Investors Are NOT Ready
Summary
Felix presents a thesis that the primary bottleneck for the artificial intelligence revolution is not chips or software, but the physical availability of electricity. Felix points out that a single AI data center can consume as much power as a small city, and with demand doubling every two years, the traditional power grid cannot keep up. Felix highlights that tech giants like Microsoft, Amazon, and Meta are signing 20-year contracts to secure power, even resorting to restarting the site of the Three Mile Island nuclear accident.
Felix focuses on the investment potential of deregulated nuclear power providers, which Felix describes as having a 'mode made of law' because they are the only entities allowed to sell power directly to private buyers at premium prices. Felix notes that while these stocks have recently pulled back from their highs, the underlying long-term demand remains unchanged. Felix also mentions infrastructure 'toll collectors' as a secondary play for investors who prefer equipment providers over energy generators.
Mentioned Stocks
Reasoning: Felix highlights that Constellation Energy has signed a landmark 20-year contract to supply nuclear power to Microsoft by restarting Three Mile Island. Felix believes the market is undervaluing the long-term profitability of these private, premium-priced contracts. Felix notes the stock is currently in a 31% pullback from its highs, offering a more attractive entry point than earlier in the year.
Reasoning: Felix observes significant insider buying and political interest in Vistra Corp, which operates in deregulated power markets. Felix states that although current fundamentals look poor on paper, the 'underlying story' of AI energy needs is not yet priced in. Felix notes the stock has declined about 33% from its recent peak, creating a potential opportunity for risk-managed entry.
Reasoning: Felix points out that Talon Energy owns the Susquehanna nuclear plant, which supports a massive $18 billion contract with Amazon. Felix argues that the company's position in a deregulated market allows it to bypass utility limits and sell directly to desperate tech buyers. Felix notes the stock is currently trading 20% below its high despite growing energy demand.
Reasoning: Felix recommends GE Vernova as an essential infrastructure play for the electricity shortage. Felix highlights a massive production backlog for gas turbines and grid equipment, stating that the company benefits from a global shortage of essential components like transformers. Felix notes that the seller sets the price in this environment.