Waves of Transformation Present Investors Opportunity
AUSTIN, Texas (Texas Insider Report) — Texans know better than most anyone in the country just how important the U.S. Energy Industry is. Unfortunately, reports over the past year have highlighted that power grids across the nation could face elevated risks this summer when customer demand soars – and when wind and solar power output are low and unable to meet the anticipated increases in demand. That is particularly true in Texas, where the Electric Reliability Council of Texas – often referred to as ERCOT – is seeing vast amounts of investment pouring into the state's rapidly growing Artificial Intelligence and Data Center Industries, which consume enormous amounts of energy and electricity.
The private and public sector are acutely aware of these shortcomings – and the solutions will be worth monitoring, as there will be significant value for investors in the companies and technologies that provide any possible fixes.
READ MORE: Gov. Abbott & Lt. Governor Patrick: New Projections for 2030 Require Building More New Plants, ASAP
- "Texas is currently the fastest state to approve and build new plants and transmission lines because of our low regulations and pro-business policies, but we must move quickly."
Earlier this month, BlackRock released its 2024 Midyear Investment Outlook entitled “Waves of Transformation,” which highlights how the world markets are undergoing a transformation – likening it to the Industrial Revolution. Investment in artificial intelligence, increasing infrastructure and energy needs, and a rewiring of global supply chains are dictating new market realities that investors may miss when on autopilot.
This wave of transformation comes during a unique economic environment, due in large part to the pandemic, marked by high inflation and interest rates, as well as increased public debt.
Positioning oneself and their portfolio for this structural transformation may seem a tall order – but there are three major themes outlined in the Waves of Transformation report:
- Getting Real
- Leaning into Risk, and
- Spotting the Next Wave
The clearest example of recent significant capital spending is in artificial intelligence – where “estimates see investment in AI data centers rising by 60-100% annually,” the report says. This capital goes hand in hand with securing energy productivity and innovation, as these centers won’t be able to function to their fullest extent without proper backstops.The second theme, leaning into risk, is relatively self-explanatory.
While some investors may sit back and wait for clarity on the direction the economy’s transformation proceeds, the report suggests that leaning into risk right now could provide bigger rewards for investors. For example, investors should take risks deliberately across multiple different dimensions.
The report says “large technology companies investing heavily in the AI buildout, chip producers and firms supplying key inputs like energy and utilities can keep doing well.”
The report says “large technology companies investing heavily in the AI buildout, chip producers and firms supplying key inputs like energy and utilities can keep doing well.”
The third theme, spotting the next wave, urges investors to consider a wide array of outcomes.
As the economy is transformed, there is no longer a case of slight deviations around a central outcome, but rather, a world where multiple, starkly different results are possible. Investors must therefore stay agile to capture opportunities and respond quickly to changing dynamics in the economy.
Additionally, they may also have to rethink what a “long-term anchor” for asset allocation looks like, according to the report.
As new technologies like artificial intelligence provide solutions to our everyday lives, there will undoubtedly be hurdles to overcome. For investors, staying up to date on shifting themes, understanding where future value is headed, and taking calculated risks could provide significant benefits.
While some 70% of Americans say they have a plan to reach their financial goals in 2024, adjusting your strategies to ensure your investments are stable and fiscally sound will always be a wise strategy to employ.
Your financially secure future can start today – with these and other insightful investment strategies.
And of course, before making any financial decisions, you should always first consult with a registered financial advisor.
