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Elon Will Handle the Energy Bottleneck Himself: Buys APR Energy for $1B · In the Loop AI

0:00
Ejaaz: Elon Musk just spent over a billion dollars of his own money to buy a company
0:04
Ejaaz: that no one's ever heard of.
0:06
Ejaaz: It's called APR. And the strangest thing about this company is it doesn't make
0:10
Ejaaz: AI chips, it doesn't make rockets, it doesn't make any sort of AI model.
0:13
Ejaaz: It makes gas turbines that sit on a trailer, get wheeled into your data center
0:18
Ejaaz: campus, and powers it on all your GPUs in a matter of days.
0:23
Ejaaz: Now, this is coming from the guy that spent two decades philosophizing about
0:28
Ejaaz: solar energy. But when you unpack why he made this purchase,
0:31
Ejaaz: it reveals a new trade in the AI space, which explains why memory stocks are crashing currently.
0:37
Ejaaz: Energy is explicitly abundant in the US, but bringing that energy online to
0:41
Ejaaz: power the billions of dollars worth of GPUs that are going online this year
0:46
Ejaaz: is an incredibly hard feat. And
0:47
Ejaaz: there's a small category of companies that are helping do this in 2026.
0:52
Josh: Yeah, there's a company called APR Energy, which is the name of the company
0:55
Josh: which he purchased. And it has a pretty funny backstory.
0:57
Josh: It was founded in Jacksonville in 2004, then listed on the London Stock Exchange in 2011.
1:03
Josh: And in 2013, it bought GE's energy rental business to become the largest mobile
1:08
Josh: gas turbine leaser in the world.
1:11
Josh: And then ever since then, it's been passed around and taken private to private equity.
1:14
Josh: And due to some investigative work and searching through
1:19
Josh: Elon Musk bought it for about a billion dollars. So what did he get for a billion
1:23
Josh: dollars? The answer is about a gigawatt of power.
1:27
Josh: For reference, a gigawatt of power powers roughly 750,000 homes,
1:32
Josh: and it's also the output for one size nuclear reactor.
1:36
Josh: This gigawatt is also enough power for about 600,000 H100 class GPUs,
1:41
Josh: which is, I mean, as far as I'm concerned, the largest coherent cluster.
1:44
Josh: So if he's actually able to get another gigawatt, that's amazing.
1:47
Josh: But the question that left me is why is this owned by elon and not spacex ai
1:53
Josh: or tesla it's like why of all the categories is he choosing this one why this
1:57
Josh: particular company and why on his personal balance sheet
2:00
Ejaaz: Yeah so i i have a few theories as to
2:04
Ejaaz: why he might want to do this um one
2:07
Ejaaz: obvious one is he might want this to apply to a bunch of different companies
2:12
Ejaaz: the other main one being tesla and Tesla, for what it's worth,
2:16
Ejaaz: is meant to be an exclusive company separate to SpaceX AI, although there are
2:19
Ejaaz: rumors that they might eventually merge at some point in the future.
2:22
Ejaaz: So I think this is more of like a tax slash structural reason why he purchased
2:27
Ejaaz: the company on his own dime.
2:28
Ejaaz: In fact, the only reason why we learned about this purchase is because one of
2:33
Ejaaz: the companies that was invested in APR had to disclose personal returns of $50 million.
2:39
Ejaaz: That's the only reason why we were able to realize that Elon made this purchase. Now.
2:44
Ejaaz: If we zoom out for a second, we've heard that energy and power is the next bottleneck
2:51
Ejaaz: for AI. But I think a lot of people don't actually understand why and what the
2:55
Ejaaz: problem is. So I just want to touch on that very briefly.
2:58
Ejaaz: Now, if we rewind about three years, 2023, the demand for data center energy
3:04
Ejaaz: was roughly at around 23 gigawatts, which at the time was gargantuan.
3:08
Ejaaz: We did not have near that amount available to bring online.
3:12
Ejaaz: Fast forward to 2026, that has more than doubled to 46.5 gigawatts, I believe, in total.
3:19
Ejaaz: Now, the issue is, in this year alone, we are only planning to bring online
3:24
Ejaaz: 12 gigawatts. That's significantly less than that 46 target, right?
3:28
Ejaaz: But it gets even worse. We are currently on track, and we're near over half the year now.
3:35
Ejaaz: On track to bring online five gigawatts of that 12 gigawatts commitment.
3:39
Ejaaz: So the point I'm trying to make is there is a significant bottleneck and it's
3:43
Ejaaz: very, very slow to bring energy online. Now, if you might ask,
3:46
Ejaaz: well, don't we have an abundance of energy in the West and America in general?
3:50
Ejaaz: The answer is, yeah, we do.
3:52
Ejaaz: But it's incredibly hard to bring this energy online.
3:55
Ejaaz: We need access to high voltage transformers. We need access to grid infrastructure.
4:00
Ejaaz: We need all the permitting and regulations around this, all of this slows everything
4:05
Ejaaz: down to the tune of five to seven years. I'm not exaggerating.
4:08
Ejaaz: We're talking about like almost over half a decade to do any of this.
4:12
Ejaaz: Now, what Elon's purchase shows us is he's kind of going into the gray area.
4:16
Ejaaz: Now, there's this thing called the Clean Air Act.
4:20
Ejaaz: And it's basically this act which states you can't bring gas turbines onto your
4:24
Ejaaz: data center in order to power up your GPUs. That's kind of like not illegal,
4:29
Ejaaz: but it's allegedly kind of like not malpractice.
4:32
Ejaaz: Now, the fact that he's purchased this company allows him to bring permitted
4:36
Ejaaz: gas turbines onto his data center ground under that clean air act.
4:40
Ejaaz: So it doesn't trigger any kind of like warnings or anything like that,
4:43
Ejaaz: which allows him to power up his GPUs.
4:46
Ejaaz: So Elon's being very smart. He's trying to be the fastest scaler for bringing
4:50
Ejaaz: GPUs online so he can build the best model. That's what Meta's trying to do.
4:53
Ejaaz: And that's what he's trying to do with Grok 4.5 and subsequent models.
4:57
Josh: Yeah, it's a race to power these GPUs. And like you mentioned,
5:00
Josh: the infrastructure is the problem here when it comes to creating power.
5:04
Josh: It is less the actual power. We have all of the resources, we have the oil,
5:07
Josh: we have the natural gas, we just have a very difficult time plugging it into
5:11
Josh: the infrastructure that we need to turn these things on.
5:14
Josh: And if you look at the country like veins, all the power lines that run through,
5:18
Josh: the grid is really strained, and it's in a really difficult place.
5:21
Josh: And I remember having this conversation a decade ago when I was first getting
5:24
Josh: excited about electric cars and teslas and the impact that just charging all
5:29
Josh: of those cars would have on the grid and how difficult it would be to sustain
5:32
Josh: and at that time we were barely keeping up
5:34
Josh: now we are still barely keeping up so to put on cities worth of energy online
5:40
Josh: into these existing grid structures it causes a lot of trouble and a lot of
5:43
Josh: problems which leads us to the one way to actually do that which is more of
5:47
Josh: a modular solution instead of tapping into the grid you have to bring your own
5:50
Josh: power, bring your own electrons.
5:52
Josh: And there's three key categories to doing that. The first is solar,
5:56
Josh: Solar has the largest footprint in terms of these options. Solar generally works
6:00
Josh: by just absorbing a lot of sun, store it in batteries, feed the batteries into the data center.
6:04
Josh: This is good, but it doesn't allow you to get as much as quickly as densely.
6:09
Josh: And the permitting, as we know, is a really difficult thing.
6:11
Josh: The second option is nuclear. Nuclear is a kind of far cry from being readily
6:16
Josh: available for data centers today, which brings us to the third,
6:20
Josh: which is just bring your own turbine
6:22
Josh: bring these turbines tap into a net gas line and they're on their way because
6:26
Josh: these turbines can just generate electricity on site and in a way these data
6:30
Josh: centers are starting to build their own electrical grids
6:32
Josh: and then perhaps they can reverse their way into feeding the existing grid but
6:36
Josh: for now they just need to get energy to the data centers and the best way of doing that is just
6:41
Josh: bring your own bring your own power grid and that's kind of the basis of this
6:44
Josh: investment here with elon is like he's now able to
6:48
Josh: buy a company that owns these turbines and he's going to bring them over to
6:51
Josh: the data center and power these chips on faster than everyone else.
6:53
Josh: This is what it's come down to. You have to actually acquire private companies
6:56
Josh: and roll out your own infrastructure if you want to build this.
6:58
Ejaaz: Isn't that insane that we are in a position where in order to get access to
7:04
Ejaaz: like a basic commodity, electricity, to power the thing that's going to make your country, your GDP,
7:09
Ejaaz: increase significantly, you have to go through all this archaic permitting laws and stuff.
7:14
Ejaaz: New York State just banned a bunch of data centers. So that's going to delay
7:17
Ejaaz: data centers in New York by like five years.
7:19
Ejaaz: It's just crazy that we have to go through all this red tape.
7:22
Ejaaz: But nevertheless, this is a workaround.
7:24
Ejaaz: And if gas turbines on a trailer sounds familiar, you are probably thinking
7:28
Ejaaz: of other companies like Bloom Energy and publicly traded stocks and companies
7:32
Ejaaz: that might be fixing or solving this bottleneck. We'll get to that.
7:36
Ejaaz: Eventually later on in this episode. But before we do that, we have to talk
7:42
Ejaaz: about the movement of funds and capital within the AI trade.
7:46
Ejaaz: Because for a lot of time on this show, Josh, we have spoken about a little
7:50
Ejaaz: component called memory.
7:51
Ejaaz: And memory feeds into a ton of things, most significantly, the GPUs that power
7:58
Ejaaz: the training and inference of all these different AI models.
8:01
Ejaaz: And one common trend that's happened with these memory pieces is the prices
8:06
Ejaaz: of these things have skyrocketed to the tune, I think it's on average three
8:09
Ejaaz: to 500% over the last nine months. So it is absolutely insane.
8:16
Ejaaz: The types of demand that we're seeing for memory, high bandwidth memory is the
8:19
Ejaaz: most obvious one, but also NAND flash, the stuff that's created by SanDisk and stuff like that.
8:24
Ejaaz: And these stocks have taken a little bit of a battering recently.
8:29
Josh: Yeah, memory stocks have been absolutely crushed. It's been a really difficult
8:33
Josh: time to invest in them if you've only owned them for two weeks.
8:37
Josh: If you've owned them for any longer, congratulations, you're still doing incredible.
8:40
Josh: But there has been this whiplash, right? That's kind of happened in memory stocks
8:42
Josh: where they went up seemingly 20% every single day for months on end.
8:47
Josh: And now they've started to back off collectively about 20% off of the highs.
8:51
Josh: And this is interesting because when you compare the actual price of memory
8:55
Josh: stocks to the price of memory, the price of memory is continuing its up only
9:00
Josh: trend. In fact, just this month, it looks like the price, the average price of DRAM
9:06
Josh: is up almost 20% on the month, which is crazy. Yes, this is the chart that I was looking at.
9:11
Josh: When you look at the month of July, the cost of DRAM is up 20% and the stocks
9:17
Josh: are down 20%, even though the demand has not changed one bit.
9:20
Josh: So that's why it seems like the market is a little spooked and rightfully so.
9:23
Josh: I mean, these stocks just ran up a tremendous amount. When you look at the actual
9:27
Josh: core cost of goods sold relative to the margin that they're able to charge for
9:31
Josh: these things, it's still continuing to go up only and that demand curve hasn't slowed.
9:35
Josh: And this is the interesting thing here is like memory stocks are getting crushed
9:39
Josh: memory prices are still going up but it seems like people are just kind of tired
9:42
Josh: of that narrative and the money is just starting to flow into other more exciting
9:45
Josh: places because i mean perhaps everyone's just made enough on the memory trade for now
9:49
Ejaaz: I i think the markets are incredibly emotional and if we use memory as an example
9:53
Ejaaz: to your point demand hasn't wavered it's just gone exponentially up the prices
9:58
Ejaaz: of these things uh going up prove it but also the
10:02
Ejaaz: ltas the long-term agreements which is basically the contracts that these memory
10:06
Ejaaz: suppliers are signing with clients.
10:08
Ejaaz: There was this crazy stat for SK Hynix, which is, I think, the number one or
10:12
Ejaaz: number two memory supplier in the world. There's only three of them.
10:16
Ejaaz: Between 13 to 15 customers secured around 40% of their projected profit for next year.
10:25
Ejaaz: So they've already sold out their supply for the entirety of 2027.
10:30
Ejaaz: And 40% of that, 40% of that profit has already been committed to.
10:34
Ejaaz: So they have to pay regardless of what happens with memory supply next year, 13 to 15 people.
10:39
Ejaaz: So the point I'm making is the demand is overwhelming at this point and nothing
10:44
Ejaaz: has actually changed. If you look at Micron, let's pull up their chart over here.
10:49
Ejaaz: Over the last month, they're down around 24%. But when I look at their forwards
10:54
Ejaaz: earnings, their 7x forwards earnings on 350% revenue and 85%, 85% gross margins.
11:02
Ejaaz: There is very little businesses, especially in the hardware realm,
11:06
Ejaaz: that makes that type of margin.
11:08
Ejaaz: And the point is like, you can call a memory bubble as soon as there's oversupply
11:12
Ejaaz: for this type of commodity.
11:13
Ejaaz: But the truth is the fabricators, the plants, the factories that are creating
11:18
Ejaaz: these things aren't in overabundance just yet. And that bottleneck isn't going
11:22
Ejaaz: to get unlocked until around 2030. But we see people getting frustrated.
11:26
Ejaaz: So I think this is just temporary.
11:28
Ejaaz: And if you want to look for a reason, a thing to blame, look no further than...
11:33
Ejaaz: Our friends over in South Korea. Now, a reminder for everyone,
11:36
Ejaaz: the two biggest memory suppliers are based in Korea.
11:40
Ejaaz: It is SK Hynix and Samsung. And there was a lot of red on the chart,
11:45
Ejaaz: as I'm showing you on my screen here, over the last two weeks,
11:48
Ejaaz: because a lot of investors in Korea were over leveraged to the tune of about a billion dollars.
11:54
Ejaaz: And so the market has shed the equivalent value over the last week to the tune
11:58
Ejaaz: of $1.5 trillion. Now, of course, that is an order of magnitude larger.
12:03
Ejaaz: I was being a little kind of tongue in cheek there. But the point is,
12:06
Ejaaz: the market is overreactive.
12:08
Ejaaz: And I think this is just oversold. The fundamentals still sit and memory is
12:12
Ejaaz: still an important trade, but people are looking for other things.
12:14
Ejaaz: And maybe that's power and electricity for now.
12:16
Josh: Yeah, I think that's probably the rotation that's happening is people are like,
12:20
Josh: I'm done playing with this toy for now. And the fundamentals are still very
12:23
Josh: strong, but I mean, everyone's just gotten a huge win and are probably just
12:27
Josh: looking for something else.
12:28
Josh: Our guess, and the reason we're recording this episode is because it seems as if that is going to be
12:33
Josh: energy it is going to be powering these things on so like everyone's like okay
12:36
Josh: well we understand memory now we understand the complex sk heinix just went
12:40
Josh: public perhaps that marked like
12:42
Josh: the end of people's enthusiasm towards it where does the money rotate out to
12:46
Josh: well probably this electricity trade and we've mentioned this a few times in
12:49
Josh: the past but the electricity trade at least for me personally is the most exciting
12:52
Josh: of all of the trades because it's something that is so
12:55
Josh: durable and so necessary in any advancement of any society ever so even in the
13:00
Josh: case all the data centers turned off tomorrow there's still this unbelievable
13:04
Josh: demand for electricity in everything that we do
13:07
Josh: and that's why the electricity trade is this really exciting thing that i'm
13:10
Josh: kind of happy to see dollars
13:12
Ejaaz: Moving over to.
13:13
Josh: Um because i mean yeah if we look at these charts that we have here the u.s
13:16
Josh: data center power demand is basically doubling
13:20
Josh: over the next 24 over the course of 24 months from 31 gigawatts to 66 gigawatts in 24 months
13:27
Josh: that's crazy and then what it does to the old grid is the total u.s electricity
13:31
Josh: demand it used to be one percent it is now climbing to three percent that number
13:35
Josh: is going to continue to be up only so there's a
13:38
Josh: increasing demand of these data centers it's not going anywhere in fact it's
13:41
Josh: going straight vertical and an incapability of us to deliver
13:44
Josh: on that demand with these existing infrastructure and you just you mentioned
13:47
Josh: it's like crazy that we have to have all these permits and everything,
13:50
Josh: but at least we have this system in place that allows people like Elon to come
13:53
Josh: and buy these turbines and like solve the problem.
13:56
Josh: So what's really cool now is this opens up this entire new world where,
14:00
Josh: all right, the grid is kind of cooked, but we need electricity.
14:04
Ejaaz: Yes.
14:04
Josh: Who are the people who are most creatively solving this problem to get these
14:08
Josh: data centers online as fast as possible?
14:10
Josh: And that's where the money is going to be flowing. It's like,
14:12
Josh: if you can create an electron of energy for cheaper than someone else,
14:15
Josh: you could drop it the data center that's basically an infinite money glitch
14:18
Josh: whoever can figure that out will get paid as much money as these large cap companies
14:22
Josh: are able to fund because that is the single bottleneck that
14:25
Josh: no one's seemingly been able to solve i mean we look at the gas turbines how
14:28
Josh: long does it take just to get a blade from a turbine they're backed up for years
14:32
Josh: with purchase orders so it's this really difficult challenge and that's where the focus is now
14:37
Josh: Who's solving that challenge?
14:38
Ejaaz: So who is solving that challenge? Maybe we should answer that question and get
14:43
Ejaaz: into kind of like the companies that are both private and publicly traded that
14:48
Ejaaz: might be solving the problem that we've just spent the last kind of 10 minutes explaining.
14:52
Ejaaz: So now we've talked about the AI infra stack. There are many different layers
14:56
Ejaaz: that previous episodes you should definitely tune in and check those out.
14:59
Ejaaz: But within the power stack specifically, there are its own layers.
15:03
Ejaaz: Now you mentioned earlier, Josh, that there are modular ways to approach it,
15:07
Ejaaz: different types of companies, nuclear, you've got kind of like solar, those kinds of things.
15:12
Ejaaz: There's also different quick fix ways to solve the power constraint.
15:16
Ejaaz: And I'm going to run through a few, starting with layer one,
15:20
Ejaaz: which I call the quick fix. That's what Elon just did.
15:23
Ejaaz: He purchased a literal company for a billion dollars that creates these gas
15:27
Ejaaz: turbines, places them on a trailer, like a trailer truck trailer,
15:31
Ejaaz: and wheels them in to your data center.
15:33
Ejaaz: A literal trailer, 18 million. A literal trailer, I'm not exaggerating here, right?
15:36
Ejaaz: And they park it behind the data center. There's actually a term for this.
15:40
Ejaaz: I was watching the All In podcast and they explained it very well.
15:43
Ejaaz: It's called behind the meter. So this is kind of like a gray area where you
15:47
Ejaaz: can kind of park it behind the official meter and power up that meter.
15:51
Ejaaz: And technically it's legal. It's all good to do. And it's a fast way to power
15:55
Ejaaz: on your GPUs, but there's a few issues with it.
15:58
Ejaaz: Number one, you can't power up that many GPUs. He's got one gigawatt and his
16:02
Ejaaz: data centers on average are gonna be scaled up to three gigawatts.
16:05
Ejaaz: So there's still kind of like a fix. thing there, you can get it online in a
16:08
Ejaaz: couple of days, which is great, but it only lasts for maybe like a six to 12
16:13
Ejaaz: months. So it's not like a long-term solution.
16:16
Ejaaz: Now, the layer below that, we start seeing names that are very popular,
16:20
Ejaaz: at least in this ecosphere, which is called Bloom Energy. Now,
16:23
Ejaaz: Bloom Energy has this thing called a fuel oxide cell. It's kind of like this
16:27
Ejaaz: massive gigantic box that, again, is portable.
16:30
Ejaaz: You bring it onto your site, similar to the gas turbines on a trailer,
16:34
Ejaaz: but it converts natural gas into energy way more efficiently,
16:38
Ejaaz: and it can last around four to seven years. Now, the reason why people are so
16:42
Ejaaz: hyped up about Bloom Energy is because.
16:46
Ejaaz: Typically, if you have to wait five to seven years to even get access to the
16:48
Ejaaz: transformer, if you can get access to this early on, and it's kind of like a
16:51
Ejaaz: medium term fix, four to seven years, you can scale your data centers way quicker
16:56
Ejaaz: and maybe even train a frontier model way sooner than your competitors.
16:59
Ejaaz: So that's what the likes of Meta and a bunch of data centers in Mexico are doing.
17:04
Ejaaz: But there is an issue with this. And I want to find the specific tweet here.
17:08
Ejaaz: Yeah, over here, Bloom Energy shares are trading lower after New Mexico regulators
17:13
Ejaaz: rejected for the second time permits for a gas pipeline.
17:16
Ejaaz: So the point that we were making earlier on this in the show is you can bring
17:20
Ejaaz: these amazing fuel oxide cells, but it runs into the red tape issue,
17:25
Ejaaz: which is we can't get access to permitting to be able to run these things.
17:29
Ejaaz: So you end up facing the delay on its own. That's why Elon purchased his company
17:33
Ejaaz: APR for a billion dollars.
17:36
Josh: And GE for Nova has kind of positioned himself at the center of this trade.
17:39
Josh: They produce the turbines and the grid equipment and the just stock has just
17:44
Josh: continued to go up and up and up uh 300 in three years and it seems like they're
17:48
Josh: taking orders all the way through 2031 so the revenue is very predictable in
17:52
Josh: 2025 their orders doubled year over year to 7.1 billion dollars and it's just this like
17:57
Josh: unbelievable company where again similar to bloom energy if you can build the
18:02
Josh: electrons they will come and as soon as you hit a wall there's someone else
18:05
Josh: who who has the permitting who hasn't hit the wall and it looks like this company
18:08
Josh: in particular is one that hasn't and And it's been this really nice, slow and steady growth.
18:12
Josh: You haven't seen the crazy exponentials like an ETF like DRAM has.
18:15
Josh: It's just slow, steady, really strong growth when it comes to building turbines,
18:19
Josh: generating electricity, and getting the permitting required to actually put these things online.
18:24
Ejaaz: I like to think of GE Vinova as the old staple of the power industry.
18:30
Ejaaz: They've been around for a while, so they know how to deal with the old school
18:34
Ejaaz: transformers, the high voltage types of things that you need to kind of equipment that you need to build.
18:39
Ejaaz: Pioneer, they have all those supply chain relationships, but they also understand
18:44
Ejaaz: the quick fix solutions that we mentioned earlier from the Bloom Energies,
18:47
Ejaaz: from the APRs, and they also spin up and create gas turbines.
18:50
Ejaaz: So if you look at the company and the clientele that they've signed,
18:54
Ejaaz: We're talking about $7 billion deals with Microsoft.
18:56
Ejaaz: We've got OpenAI being one of their primary customers. They're all in the process
19:00
Ejaaz: of powering up a bunch of these companies' data centers. So the point is,
19:04
Ejaaz: GE Vinova is kind of like the TSMC of power, dare I say.
19:10
Ejaaz: And they've kind of been around, they've kind of proven their method,
19:13
Ejaaz: and they're seeing consistent demand.
19:14
Ejaaz: I think they're growing on average around 30% year over year.
19:17
Ejaaz: But if I had to take a bet for this particular company, again,
19:20
Ejaaz: not investment advice, I would say that growth goes exponential.
19:24
Ejaaz: Over the next six to 12 months when people realize that you need power and energy
19:27
Ejaaz: to bring these things online.
19:30
Ejaaz: Now, the final rung of our stack that I'm showing you over here,
19:34
Ejaaz: it says layer four, it talks about utilities and IPPs, but one thing that isn't
19:38
Ejaaz: mentioned right now is the nuclear side of things.
19:41
Ejaaz: And there is a company that we've interviewed the founder of.
19:45
Ejaaz: And they're building kind of like the modular approach to nuclear.
19:48
Ejaaz: Now, typically, if you look at any nuclear company, you're not seeing any of
19:52
Ejaaz: these really come online until 2031 to 2035.
19:56
Ejaaz: But Valor is an example of a company that is going to speed this up pretty significantly.
20:01
Josh: Yeah. Also, just to clarify, an IPP, it's an independent power producer,
20:05
Josh: which is a company that owns plants and sells electricity into the market rather
20:09
Josh: than serving a regulated territory.
20:12
Josh: And this is a really important distinction because
20:14
Josh: Like we mentioned, selling back into a market is far better than having to deal
20:18
Josh: with red tape. So you figure out the red tape on your own, you produce the power,
20:22
Josh: and then you sell it back. And that seems to be the best way that these companies
20:25
Josh: are kind of working this out.
20:28
Josh: And in fact, larger companies have been working with these IPPs to lock in 10
20:34
Josh: to 20 years of electricity at fixed terms.
20:37
Josh: So Microsoft, for example, they have Three Mile Island, which I mean,
20:40
Josh: for those who aren't familiar is a very old previously shut down nuclear reactor
20:45
Josh: they brought it back online and their deal length is 20 years and they get 100 of the output so
20:51
Josh: the time horizons on these are huge and it shows the
20:54
Josh: the real scale of what this kind of power trend is going to look like over time
21:00
Josh: where there's obviously no shortage of energy demand people are locking it up
21:03
Josh: for decades at a time as if there was very long-term bonds because electricity really is
21:09
Josh: a form of currency now it's like if you if you can get the electrons you could
21:11
Josh: power on the intelligence you could serve the tokens you can make money and in a way
21:16
Josh: earning 20 years of electricity getting that lockdown is is more powerful than
21:20
Josh: issuing like a 20-year bond who can give you three percent because you can create
21:24
Josh: a lot more upside with that energy so this is an important trend that i think
21:27
Josh: we're going to be following as well it's just seeing
21:30
Josh: What companies are able to lock up guaranteed energy for a really long time
21:34
Josh: and the nuclear opportunity like you mentioned is so cool it's just a little early.
21:37
Josh: No one's quite got them online yet. No one has figured out the permitting.
21:41
Josh: It's not there, but man, when that comes online, that's gonna be huge.
21:44
Ejaaz: You know, as we talk about kind of like the...
21:48
Ejaaz: The structure of these energy and power companies and the deals that they're
21:53
Ejaaz: starting to sign, but it hasn't been really abundantly signed just yet.
21:56
Ejaaz: It's not really guaranteed growth rate.
21:58
Ejaaz: It's a little bit murky. People aren't really sure if this is going to be the
22:00
Ejaaz: next trade. You know what it reminds me of?
22:03
Ejaaz: It reminds me of the memory trade before it became the memory trade.
22:07
Ejaaz: Before they started signing massive long-term agreements and price hikes of 300% to 500%.
22:13
Ejaaz: It sounds exactly the same. You know, history doesn't repeat, but it rhymes.
22:17
Ejaaz: And I'm sensing this for the power trade as well. People don't really know about GE Vinova.
22:22
Ejaaz: Maybe people in the comments are gonna say like, hey, like, you know,
22:25
Ejaaz: I'm an old schooler here and I have heard of it, but like most people don't,
22:29
Ejaaz: and they don't understand the importance.
22:30
Ejaaz: It's a very different type of problem. Like with memory, it's easy.
22:34
Ejaaz: It's like kind of like memory, okay, you need to remember context about everyone.
22:37
Ejaaz: I want the AI to remember me, cool.
22:38
Ejaaz: But power, it's kind of just like, yeah, can't you just get the electricity?
22:41
Ejaaz: Don't we have like an abundance of electricity? And it's a much more nuanced problem.
22:44
Ejaaz: And I think people are now only starting to unpack what that investment sector
22:49
Ejaaz: might actually look like. So brings us to the question,
22:53
Ejaaz: bull and bear case josh um i think you should go first what is your are you
22:57
Ejaaz: bullish or bearish about this uh this power trade over the next let's say six
23:03
Ejaaz: to 12 months and then like three to five.
23:04
Josh: Years yeah i'm bullish on the power trade till the end of time i think like at the limit
23:09
Josh: electrons are more valuable than dollars and i think this continues to be true
23:14
Josh: for basically infinity there has been a singular trend throughout all of history
23:18
Josh: where more energy equals more productivity, equals more innovation,
23:21
Josh: equals more prosperity.
23:22
Josh: And the more electrons you could throw at a problem, the better the success outcomes become.
23:28
Josh: And this seems like a one-word trade forever. In terms of these swing trading
23:32
Josh: things that are happening, I don't know. I mean, memory was the first trade
23:36
Josh: of the first half of 2026.
23:38
Josh: And it's ironic that kind of peaked the same week that SK Hanex listed on the
23:42
Josh: NASDAQ. And now the question is, like, what is the next scarce input everyone's running to?
23:46
Josh: Elon kind of answered it with his billion dollar acquisition.
23:48
Josh: He said, hey, it is electricity, it is electrons, go do this.
23:51
Josh: So in terms of short term, seems good. In terms of long term, seems amazing.
23:56
Josh: Medium term, who knows, but I think the demand for electricity is up only forever.
24:01
Ejaaz: Okay, that's pretty bullish. I'm afraid to say that I'm also equally as bullish.
24:07
Ejaaz: I'll give you a few different reasons as to why.
24:10
Ejaaz: Number one, I love that this layer of the AI infra stack is completely agnostic
24:16
Ejaaz: to whatever your model is, whoever created the model, and most importantly,
24:21
Ejaaz: which country created the model.
24:22
Ejaaz: A big topic of debate over the last week is China versus the USA.
24:27
Ejaaz: Hey, China just released an amazing open source model, the largest ever,
24:31
Ejaaz: 2.8 trillion parameters, Kimi K3.
24:33
Ejaaz: And it's now the case that over 56% of tokens, at least on OpenRouter,
24:37
Ejaaz: which is an open American platform, is being spent on Chinese open source models.
24:42
Ejaaz: So the big question is, should we allow people to use these open source models?
24:46
Ejaaz: And does it matter that they're not using an American-based model?
24:49
Ejaaz: Well, you know who isn't worried?
24:50
Ejaaz: Jensen Huang, who creates GPUs that power all these different types of models.
24:54
Ejaaz: And you know who doesn't care below Jensen Huang?
24:57
Ejaaz: It's all the people that are helping power and energize all these GPUs.
25:01
Ejaaz: It's going to be the same case. It doesn't matter if your model is open,
25:04
Ejaaz: whether it's cheap, whether it's expensive, whether it's Frontier, whether it's not.
25:07
Ejaaz: The point is you're going to need energy and you're going to need GPUs to do
25:09
Ejaaz: this. It's a commodity that is going to be required regardless of the situation
25:13
Ejaaz: or geopolitical situation as is.
25:16
Ejaaz: Now, when we talk about energy in general, we can't talk about Elon purchasing
25:20
Ejaaz: APR and also Elon launching data centers into space to literally harness the energy of the sun.
25:27
Ejaaz: He's been the biggest proponent of energy harnessing for a while now,
25:31
Ejaaz: and he's taking two different approaches on the ground.
25:33
Ejaaz: He's purchasing companies like APR for short-term fixes, but he's also,
25:37
Ejaaz: in his long-term plan, aiming to.
25:40
Ejaaz: Harness one of the largest energy sources in our galaxy.
25:44
Ejaaz: And so if that doesn't show you how bullish people are on the future demand
25:49
Ejaaz: of energy, I don't know what will.
25:50
Ejaaz: So I think this is just going to be a growing trend that people are going to
25:54
Ejaaz: become more amicable to like they did with the memory trade over the next couple
25:59
Ejaaz: of years. And you just need to sit tight.
26:01
Josh: And that is the episode on the state of energy, the state of power,
26:05
Josh: the state of electricity, where the possible next trade is going
26:09
Josh: again as always not financial advice i don't even own any of this stuff here
26:12
Josh: although i probably should
26:13
Josh: but it's just interesting it's exciting to talk about and it feels directionally
26:17
Josh: correct at least so now you have an understanding of loosely how things work
26:21
Josh: why it is so important and why a lot of people are equally as excited
26:25
Josh: about this opportunity if you enjoyed this episode please do not forget to share
26:29
Josh: with a friend with a family member who might also enjoy maybe electricity maybe
26:34
Josh: one of the other episodes that we've recorded this week
26:36
Josh: if you liked it please don't forget to rate us five stars on your favorite podcast
26:41
Josh: platform where you get your podcasts.
26:42
Josh: And yeah, is that everything? Anything else you just before we let
26:45
Ejaaz: People go here? The final call is Limitless has gone independent.
26:49
Ejaaz: We are keeping the lights on at home and we would love to look for a partner.
26:53
Ejaaz: So if you are someone that has a product or service, or if you know of someone
26:56
Ejaaz: that has a product or service that would be amazing to share with our Limitless
27:00
Ejaaz: audience, please reach out.
27:01
Ejaaz: Email us in the description below or reach out to us on X. But that should be
27:04
Ejaaz: it. And we will see you folks on the next one.
27:07
Josh: See you next time.