AI CapEx supercycle & energy infrastructure

Horacio Coutino, multi-asset strategist

Renée Friedman, Global Head of Research

“The single biggest constraint is power.”
Andrew Jassy, CEO of Amazon, referring to AWS supply constraints during Amazon’s Q2 earnings call.
 

AI represents a transformative platform shift exceeding the impact of the internet, mobile technology, and cloud. This evolution unfolds through successive waves, each amplifying computational demands and, consequently, electricity consumption. For equity investors, understanding the magnitude of capital deployment, technological innovations, and energy dynamics underlying this transformation is essential to identifying sustainable investment opportunities.

The emergence of reasoning models introduces a new dimension of computational complexity. These models are substantially more compute-intensive than generative AI systems. This is because they iterate through multiple cognitive steps before producing responses, generating a significant volume of internal calculations and text in the process. This architectural distinction carries important implications for infrastructure requirements and energy consumption patterns.

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