The artificial intelligence revolution is fueling a fierce clash for increasingly scarce resources. That appears to be the case, given that a single query on ChatGPT requires nearly 10 times as much electricity as a traditional search query on Google. You will be mistaken to think that only power grids are being strained amid the AI boom.
Water, land, metals, and minerals are some of the natural resources being strained as the AI race heats up. In addition to natural resources, millions of humans are always on dial engineering, correcting and training models at the heart of AI.
AI mostly lives and works in data centers, which are humming with motherboards, chips, and storage devices. The demand for electricity from these centers is currently higher than the supply in many parts of the world. Likewise, Goldman Sachs reports that data centers in the US are likely to use 8% of all electricity by 2030, which is almost three times the percentage in 2022 when the AI craze first started.
“The data centers have to partner with utilities, the system operators, the communities, to really establish that these things are assets to the grid and not liabilities to the grid. Nobody’s going to keep approving,” said Ali Fenn, president of Lancium, a company that secures land and power for data centers in Texas.
Similarly, it’s no longer a secret that resource-intensive AI will create winners and losers. Tech giants willing to spend billions of dollars appear to be having an edge. That might explain why the US tech giants are on course to spend $320 billion in 2025, primarily to enhance their AI infrastructure.
Likewise, it is a battle for supremacy between nations as they look to outdo each other on a technology that’s emerged as a matter of national security. The US has already passed legislation prohibiting the sale of advanced chips and equipment to China. Beijing has also hit back with similar restrictions.
“We will safeguard American AI and chip technologies from theft and misuse, work with our allies and partners to strengthen and extend these protections and close pathways to adversaries attaining AI capabilities that threaten all of our people,” said US Vice President JD Vance
The fact that AI is causing conflicts over increasingly limited resources, including chips, is no longer a secret. It is encouraging tech companies to look for more effective ways to develop artificial intelligence. They are investing billions of dollars in alternative energy sources like nuclear fusion, which have been stuttering along for years or even decades without significant investment or technological advancements. Even though the world is on track to surpass important emissions targets in the fight against climate change, the demands of AI are increasing the pressure to continue burning fossil fuels to power the grid.
There is danger even though the AI rollout offers investors, companies, and societies many opportunities. Numerous people have brought up the possibility of such systems being biased and harmful. Meanwhile, Wall Street is growing weary of waiting for the technology to produce significant financial gains. Even emphasizing efficiency could become a liability for those who make excessive infrastructure investments.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds in Q4 2024.
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10. Agora Inc (NASDAQ:API)
Number of Hedge Fund Holders: 11
Agora Inc (NASDAQ:API) is a software application company that provides real-time video, voice and messaging engagement services. It operates a real-time engagement platform-as-a-service (RTE-PaaS) to provide the software and infrastructure required to enable real-time engagements. The company delivered solid fourth quarter and full-year 2024 results on February 26, as it bounced back to profitability.
While revenue in the fourth quarter was down 4.4% to $34.5 million, Agora Inc (NASDAQ:API) achieved a net income of $0.2 million, up from a net loss of $2.6 million for the same quarter the previous year. The company also reiterated that generative AI represents a transformative opportunity to enable real-time, voice-based interactions between humans and AI models. Likewise, it confirmed the launch of Conversational AI Engine, a solution allowing interactive voice experiences with any large language model.
“Our solution is designed to deliver natural conversation dynamics, including intelligent pause and interruption handling, advanced voice processing features such as selective attention and noise suppression, as well as ultra-low latency. We believe this innovation will accelerate the adoption of conversational AI across diverse industries and serve as a key driver of our future growth,” said Tony Zhao, Founder, Chairman, and CEO of Agora.
9. SES AI Corporation (NYSE:SES)
Number of Hedge Fund Holders: 14
SES AI Corporation (NYSE:SES) is an auto parts company that develops and produces high-performance lithium-metal rechargeable batteries for electric vehicles and other applications. The company leverages AI to accelerate the development and manufacture of batteries in addition to detecting manufacturing defects. It delivered solid fourth quarter and full year 2024 results on February 25, which marked a critical inflection point.
SES AI Corporation (NYSE:SES) delivered its first revenue-generating quarter with $2 million and projected revenue of between $15 million and $25 million in 2025. Additionally, SES AI Corporation achieved a significant milestone in the discovery of an AI-enhanced molecule that enabled the unveiling of a new 2170 cylindrical cell. The cell is for humanoid robotics applications and new and existing Li-Metal and Li-ion applications in EVs and drones.
“Commercialization of AI for Safety has also opened a market for Battery Energy Storage Systems that we believe is 10 times larger than automotive. The contracts and MOU we signed in all of these markets provide the basis for our 2025 projection of revenue in the range of $15 million to $25 million,” stated Dr. Qichao Hu, Founder and CEO.