Sep 24, 2025 · 27 min · 10 segments
In this piece, we look at the AI and data center takeover, and the OpenAI-Oracle deal; the US government equity investment in Intel, the origins of TSMC and how many countries support national…
Michael CembalestHostSo I made a fake movie poster of a movie called The Data Center Blob, starring Amazon Web Services, Microsoft Azure, Google Cloud, etc.
And it also shows who the producers are, the directors, and who financed it.
And what I was trying to capture is the extent to which AI and data centers are kind of just taking over and gobbling up all sorts of different things.
We have a basket of AI-related stocks, and most of them, about 30 of them, are direct AI plays, and the other 10 are either utilities or capital equipment stocks.
There are high concentrations of tech stocks at the end of the 90s to price returns, but they certainly didn't have that high share either of capital spending or of earnings.
And this is happening just as data centers are eclipsing office construction spending and are also coming underneath under increased scrutiny from their impact on power grids and rising electricity prices.
And some of the research that we are doing is showing that the specialized power rates that some of the utilities are applying to data centers, even though they're higher than traditional rates, aren't nearly enough to pay for the costs of a new combined cycle natural gas power plant, which costs have doubled to about $2,500 a kilowatt over the last couple of years.
And in the PJM region, the watchdog that pays attention to that particular grid.
did some analysis and found that 70% of the increase in electricity prices in 2024 was due to data center demand.
So the AI data center blob is not just taking over equity markets, it's also taking over power markets.
And you can see in this same chart, what's happened to construction spending on electric power, more or less has been rising at the same pace as construction
spending on data centers.
The other big news in the AI space was this Oracle OpenAI partnership and Oracle stock jumped by 25 to 30%.
And it was kind of an interesting sign at the time because OpenAI is promising to pay 60 billion a year, which is money they don't earn.
So I made a fake movie poster of a movie called The Data Center Blob, starring Amazon Web Services, Microsoft Azure, Google Cloud, etc.
And it also shows who the producers are, the directors, and who financed it.
And what I was trying to capture is the extent to which AI and data centers are kind of just taking over and gobbling up all sorts of different things.
We have a basket of AI-related stocks, and most of them, about 30 of them, are direct AI plays, and the other 10 are either utilities or capital equipment stocks.
There are high concentrations of tech stocks at the end of the 90s to price returns, but they certainly didn't have that high share either of capital spending or of earnings.
And this is happening just as data centers are eclipsing office construction spending and are also coming underneath under increased scrutiny from their impact on power grids and rising electricity prices.
And some of the research that we are doing is showing that the specialized power rates that some of the utilities are applying to data centers, even though they're higher than traditional rates, aren't nearly enough to pay for the costs of a new combined cycle natural gas power plant, which costs have doubled to about $2,500 a kilowatt over the last couple of years.
And in the PJM region, the watchdog that pays attention to that particular grid.
did some analysis and found that 70% of the increase in electricity prices in 2024 was due to data center demand.
So the AI data center blob is not just taking over equity markets, it's also taking over power markets.
And you can see in this same chart, what's happened to construction spending on electric power, more or less has been rising at the same pace as construction
spending on data centers.
The other big news in the AI space was this Oracle OpenAI partnership and Oracle stock jumped by 25 to 30%.
And it was kind of an interesting sign at the time because OpenAI is promising to pay 60 billion a year, which is money they don't earn.
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