Dear Reader,

Good morning,

Happy Monday.

On Friday we talked about the fact that 90% of Nvidia’s revenue comes from data centers. 

Today, I want to touch on the biggest problem facing data centers, and the unlikely hero rising up to solve it:

So, first - what is AI’s Achilles heel?

Electricity.

Understand, all over the country hyperscalers are building massive, football-field-sized data centers like giant brains; Nvidia chips in servers, all connected and thinking.

You have Microsoft, Amazon, Google, Meta - all these tech companies and others, spending tens of billions of dollars to build these new facilities designed to run and train AI.

They house thousands of power-hungry GPUs.

So, let’s say you build a behemoth data center in the middle of Wyoming. How are you going to power it?

You can’t just plug it into an outlet, right?

You need power, lots and lots of power. More power than currently exists in the place. 

Companies building AI are realizing this. The bad news for them is…

Bitcoin miners got there first.

The whole business of mining Bitcoin is complicated math. 

They’ve created data centers and signed long-term energy contracts.

Since they ran into this same problem five years ago (admittedly on a smaller scale), they locked in long-term electricity contracts to solve their desperate need for mass amounts of electricity. 

So now, we have an interesting new situation at play…

Hyperscalers are coming knocking on the doors of these Bitcoin miners, saying, “Look, you could help us. You could be part of our data center. You could sell us some of your electricity. You could get paid on this AI boom, too.” etc.

It’s really created an interesting investment opportunity. 

We have a Bitcoin miner trading at a couple dollars a share that’s my personal favorite of these.

You’ve probably heard about Core Scientific and all these other companies and their mind boggling electricity contracts; 1.3 gigawatts of electricity. 

Now, a couple weeks ago I took my son to the movie theater to see the re-release of the original Back to the Future movie. 

In the movie, Doc Brown asks Marty how much energy you’d need to get back to 1984. Marty finds out it’s 1.21 gigawatts they have to hook up to the DeLorean to send it back to the future.

That’s so much electricity!

One company we’ve been following for a while in Takeover Targets is a Bitcoin miner that has 1.3 gigawatts of electricity locked in.

They just hired onto their board a guy who was on the board of directors at Amazon Web Services for 12 years.

In his speech on joining the company he says,

“I’m excited to join at such a transformative time for the company and overall digital infrastructure industry. 

“Their strategic pivot to high performance computing and AI aligns perfectly with my passion for building scalable, innovative enterprise and data center technologies with a robust 1.3 gigawatt energy pipeline… 

“We have what hyperscalers want: Power, and lots of it.

“I look forward to leveraging my expertise to help capitalize on surging demand for this infrastructure to drive sustainable long-term value for the company and its stakeholders.”

Now, here’s where it gets really interesting - 

This $2 stock is trading like a Bitcoin miner on Bitcoin’s price decline.

But, it’s pivoting to be an AI hyperscaler and infrastructure company.

That means it should be trading at $6 to $10 a share.

This company is transforming from caterpillar to butterfly before our eyes, but Wall Street doesn’t yet perceive it.

I’ve often found in my long career that Wall Street doesn’t perceive something as it is. It perceives it as it was. 

And situations like this one create great little opportunities.

These are exactly the opportunities Takeover Targets is designed to zero in on.

Here’s how it works>>>

"The Buck Stops Here"