The second order effect of AI is investable

As a knowledge worker in the age of machines there’s a temptation to feel a bit downbeat.

Heck, I can see an AI data centre from the deck of my house.

But today I’m going to tell you about where you can put your money in the age of machines.

It’s a place very few people are looking.

Right now, all the capital is flowing to the massive tech companies.

Everyone can see what’s happening.

People are talking in borderline religious language.

There’s evangelism, and there’s fear.

And then there’s ever more enormous sums of money:

Source: Bloomberg

What if I were to tell you that there’s a second order effect of the AI revolution?

One very few are paying attention to.

A second-order effect is an indirect or unintended consequence that follows a primary outcome of an action, like a chain reaction where the result of the first action then causes another effect.

Right now, everyone is asking… and then what?

The energy consumption, the processing power, the money flows.

Or…

Do we get beamed up into the metaverse, made into holograms and wiped out by terminator bots?

You see, when everyone sees the headlines of these massive deals for data centres, there’s a scramble to look at the first order effects.

I think the second order effect is literally rocks.

Yes, geology.

AI data centres don’t just happen with money, good connections to political leaders, and some smooth-talking tech CEO.

They require raw materials.

And finding those raw materials will become ever more important.

In fact, when I thought about it…

Every stock I’ve recommended to readers across Australian Small Cap Investigator is in some way closely tied to AI.

And the majority are raw materials that will be needed for these AI data centres.

For instance, I recently tipped three lithium developers.

Lithium is needed for AI data centre battery energy storage backups, the drones, the humanoid robots…the list goes on.

And in Fat Tail Microcaps I tipped a gold explorer that has a special resource on its project used in the next wave of AI data centre chips.

Then there’s a uranium developer – great for nuclear power (in fact it just signed offtake agreements with two of North America’s largest energy providers).

Clearly, the future supply of energy and energy materials is where smart investors and funds are putting their money right now.

So while people pile into the massive tech giants, it seems clear to me that the next wave of capital will flow to the things required to make the AI dream a reality.

And remarkably, that should bode well for the ASX-listed, resource focussed stocks out there that have the necessary materials.

So in a nutshell, stop thinking about where money is going now, and start thinking about where it will go next.

There is no magic wand that creates AI data centres.

You’re still going to need to pull things out of the dirt.

That’s my paydirt advice in today’s market.

Maybe I’m obsolete.

Rock on.