AI data center build-out drives reindustrialization
The guest argued that the massive physical requirements of the AI build-out—specifically electricity, data centers, and logistics—are driving a physical reindustrialization of the US heartland.
The argument
Peter Tchir of Academy Securities argued that the build-out creates significant employment and demand in construction, electricity generation, and logistics, benefiting heavy equipment manufacturers. He noted this physical expansion is concentrated between the Appalachians and the Rockies.
The thesis, stress-tested
✓ What validates it
- ✓Increased backlog and order growth for heavy industrial equipment
- ✓Accelerated construction starts for utility-scale power projects in the US Midwest
▸ Risks discussed
- ▸Political backlash over massive electricity and water usage by data centers
- ▸Slowing corporate capital expenditure on AI infrastructure
Hear it yourself
"Well, if there is a rate hike cycle beginning because of these factors that we both have, a low unemployment rate, and at the same time, we also have a pressure on inflation, then all those things would certainly argue for the risk to the upside, namely the rates are going to stay higher for longer. The picture that you're painting of both an inflationary build out of AI plus a labor market that's poised for expansion, not contraction due to the extra economic activity, is one that could call for a rate hiking cycle. What could you potentially see? I mean, what is increasingly your base case going into 2027? Yeah."
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