Cheaper, Faster, Better: The Case for Green Energy

♻️ Clean energy is here to stay… maybe we should really #JustStopOil March 19, 2024 | Peel #670 Silver Banana goes to... [Zette. ]( In this issue of the Peel: - 🤯 AI is estimated to add $15.7tn to total global GDP up until 2030?! - 🚨 Fisker shares are down >90% YTD… what’s going on? - ♻️ Clean energy is here to stay… maybe we should really #JustStopOil. Market Snapshot 📸 Banana Bits 🍌 - Jensen Huang puts on a rockstar performance at Nvidia’s GTC 2024, [calling for bigger chips]( - Homebuilders are [feeling confident](). If only homeowners felt the same - UBS targets [U.S. firms for M&A](=) as it looks to become the “[Morgan Stanley of Europe]()” - “There’s a bull market in bull market indicators flashing red right now”—[Ben Carlson]( This Harvard-Founded AI Startup Grew 5x in 2023 (And You Can Invest) Invest as little as $250 in Zette on [Wefunder]( before early bird terms sell out. Out of free articles? Zette.ai is pioneering a future where you’ll never be blocked again. 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Macro Monkey Says 🐒 Everything, Everywhere, AI At Once The discovery of fire, invention of the wheel, and Applebee’s Dollaritas—three of the most important developments in the history of humanity. Now, people way smarter than me are saying that artificial intelligence could be the next addition to that elite list. Personally, I would’ve guessed Dunkin’ Spiked Iced Coffee would be the next great invention for humanity, but I guess we’ll see. Artificial intelligence is here, and, given the big macro week ahead of us, along with the long-term impacts of AI, we figured it’s time for another update on this new tech. So, let’s get into it. The Big Announcements Yesterday, AI kingpin Jensen Huang and his company, which you might be slightly familiar with, Nvidia (NVDA, +0.7%), put on an event one analyst dubbed the “AI Woodstock.” And, compared to other big tech events in years past, Nvidia’s GTC 2024 dominates the league. The GPU Technology Conference began yesterday and runs through Thursday, with all the big announcements slated for later this week. Execs from OpenAI, xAI, Microsoft, Meta, Google, and more are in attendance, so we’ll let you know what emerges. After yesterday, the “coolest” new product was a brand new GPU platform meant to overtake the H100 as the company’s next killer product. Huang calls it “the Blackwell” and alleges it is “the world’s most powerful chip.” But outside Nvidia’s nerd rave, a lot has been going on in AI lately and you need to know about it. For starters, Apple and Google made a big announcement yesterday (described in ‘What’s Ripe”), but the world’s 2nd most valuable company also quietly unveiled their own LLM, called MM1, in a [research paper]() published this weekend. While I, as an American, have no idea wtf a “Celsius” is, this LLM does. The important thing here, however, is that 1) Apple is finally getting in on the AI game, and 2) according to the research paper, this 30bn parameter model is on par with GPT-4. Finally, the last big announcement over the past few days came from none other than Elon Musk’s xAI, his new OpenAI competitor. The young firm released the weights and architecture of this first Grok iteration, surprisingly living up to its commitment to transparency. [Source]( What Else Is Going On In AI? Other announcements over the past few days include: - Devin, a cleverly named coding bot, went viral on X, [showing off its skill]() - Vermont Senator Bernie Sanders proposed a bill to establish a [32hr workweek with no pay reduction](=)given the productivity jumps on AI (smh, how lazy) - Google Deepmind announced VLOGGER AI, which unfortunately allows users to create surprisingly realistic videos of people with full upper-body motion from uploading just a single image… can’t wait to see how that gets used! Amid all of these announcements, economists and other researchers are starting to guesstimate what kind of impact AI will have on the economy now and in the long term. That’s the kind of wild speculation we love, so let’s see what they got. For starters, AI is estimated to add $15.7tn in total global GDP between now and 2030. That’s more than the current GDP of Germany, Japan, India, and Brazil… combined. Needless to point out, the major questions are 1) where and 2) how that $15.7tn comes into play. The potential for large-scale job displacement is the main concern of most workers today, but lately, job “enhancement” has become a popular theory. [Source]( According to the IMF, ~60% of jobs in advanced economies are “highly exposed” to disruptions from AI. That “disruption” could mean many things, but “enhancements” might be the AI dream come true. For example, lawyers could simply use an AI bot (such as [Harvey]() to replace paralegals and even associates, allowing one good lawyer to do nearly all the work that requires an entire firm today. I mean, just imagine Mike Ross with an AI Harvey. That’s the guy I want defending me on my eventual insider trading case. The Takeaway? I’m sure we missed a lot of big developments. Hell, with the way this sector is changing, some of this could be obsolete by the time you're reading this. But, the key strategy for workers looking to not be made homeless by artificial intelligence is, at least for now, to play around with these things and stay on your toes. Despite all the speculation, nobody has a good idea of how this will play out in the long term. Ideas ranging from Terminator to loading us all up with Neuralink chips seem equally likely at this stage, so let’s just keep our fingers crossed it’s neither of those. We’ll see. What's Ripe 🤩 Alphabet (GOOGL) 📈4.4% - Rumors have it that “Levels” by Avicii was bumping on repeat all across Mountain View yesterday as Google finally had some good AI news. - Reports emerged early on Monday that Apple is in talks with Google to license the search engine’s Gemini LLM for iPhone use cases. - Apple shares confusingly rose in tandem (AAPL, +0.6%) despite this suggesting the firm is more confident in Google’s tech than their own. Tesla (TSLA) 📈6.3% - Just like when he said “Go f*ck yourself” to advertisers, Elon just gave a similar message to Tesla’s recent price cuts… and investors are loving it. - On Monday, reports emerged that Tesla will be raising the price of its Model Y by $1,000, the company’s 2nd lowest-cost option. - The hike applies to U.S. markets, with some Euro markets getting a €2,000 bump. Price cuts outside of China haven’t done much to spur demand. - So, the company seems to have figured they might as well stop eating their own margin in the meantime. But damnit, now I have to go update our model for [WSO Alpha](. What's Rotten 🤮 Fisker (FSR) 📉15.6% - Moving to the rock bottom of the EV industry, Fisker shares plummeted once again as the firm looks to pause production and raise $150mn. - I’m no consultant, but in my experience, pausing the creation of products generally isn’t a great way to make more money. Shares are off >90% YTD. - But, the firm is raising $150mn through a $167mn convertible note offering. They hope the funds will help avoid bankruptcy, but lacking cars sure won’t. Super Micro Computers (SMCI) 📉6.4% - Like the guy who didn’t get a spot in the group chat, Super Micro is about the only AI company that didn’t get the memo for today’s party. - Shares dumped while almost every other AI stock was popping off. The chip maker officially joined the S&P 500, so profit-taking was the vibe for the day. - The stock is still up well over 900% over the past year, so I’m sure they’re not too upset with this “buy the rumor, sell the news” action. Thought Banana 🤔 Green With Envy Breaking News: Blockbuster Video’s CEO has come out and announced that we need to abandon the transition to streaming media. He says, “the current transition strategy is visibly failing on most fronts.” Oh, just kidding—that was the CEO of Saudi Aramco, the world’s largest oil company, describing the transition to green energy. My bad, damn autocorrect, you know? Smoking Copium We’re not usually this blunt, but clearly, Amin Nasser took a hit of one before making the above comments. Saying the green energy transition is failing is like saying the Union had no chance in the Civil War at the Battle of Bull Run. But then again, obviously, the CEO of the world’s largest energy company—and 4th most valuable company, period—is gonna talk about his book. It’s his duty to shareholders to spread FUD (to borrow a BTC term) about any disruptive technology. [Source]( But after a quick Google search on this subject, you’ll learn two things. First, the clean energy transition is still in its infancy, and second, it’s clearly going to win eventually. My prediction is that this quote will be looked back on just like the Steve Ballmer laughing at the iPhone [back in 2007](. For starters, investment in clean energy has only just surpassed that of fossil fuels in 2016. They were basically even through 2019 and 2020, but as of the post-pandemic era, clean energy investment dollars have swallowed fossil fuels whole. Investors generally don’t pour money into developments that are “visibly failing.” Not that investors are always right either, but everyone from [Chevron]() to Greta Thunberg is betting on clean energy. But, like any technological transformation, this really comes down to three words: Cheaper, Faster, Better. = Just taking solar and wind as examples, the cost per megawatt hour of energy has absolutely plummeted—down more than 99% for solar—in just the last 50 years. Meanwhile, fossil fuel costs have barely budged. Much of that has to do with the fact that OPEC+ countries intentionally keep these costs high, as they have to, given that it accounts for 75% of Saudi Arabia’s and 34% of Russia’s respective fiscal budget in any given year. When it comes to speed, that’s difficult to measure. Viewing speed as the time taken to begin construction of an energy generation site to the deployment of that energy, wind, and solar farms generally require ~2 years while that of natty gas is [at least 4 years](. Finally, the question of “better” could be even more challenging to measure, but just to highlight some facts that might illuminate which is “better:” - Green energy doesn’t run out, but we need battery tech to keep improving for this to be true at industrial scales - Green energy plants generally require significantly less maintenance - Green energy reduces the West’s reliance on foreign adversaries for energy - Green energy doesn’t emit harmful chemicals once constructed The Takeaway? I don’t mean to go full #JustStopOil here, but the world is clearly moving to clean/green dominance. It won’t happen this year or even by 2030, most likely, but just like in investing, the trend is your friend. And, the above arguments don’t even mention anything about nuclear. If we can eliminate the generational fear from events like Chernobyl, Fukushima, and Three Mile Island, nuclear energy is all we will need. Green energy is cheaper, faster, and better, and becoming more so overtime. Plus, when the CEO of the largest company for a certain commodity says something bad about a replacement for that commodity, it kinda tells you everything you need to know. Real confidence is quiet. Someone send this to Greta so I can go with her to next year’s World Economic Forum. 💭 The Big Question 💭: When will green/clean energy overtake fossil fuels? What challenges will the energy sector face along the way? What does the future hold for fossil fuel companies and countries? Banana Brain Teaser 💡 Previous 🗓 Bouquets are to be made using white tulips and red tulips, and the ratio of the number of white tulips to the number of red tulips is to be the same in each bouquet. If there are 15 white tulips and 85 red tulips available for the bouquets, what is the greatest number of bouquets that can be made using all the tulips available? Answer: 5 Today 🕐 Over the past 7 weeks, the Smith family had weekly grocery bills of $74, $69, $64, $79, $64, $84, and $77. What was the Smiths’ average weekly grocery bill over the 7 week period? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says 🤓 “If you don't innovate fast, disrupt your industry, disrupt yourself, you'll be left behind” — John Chambers How Would You Rate Today's Peel? 😁[All the bananas](=) 😐[Meh](=) 😩[Rotten AF](=) Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE]( // [WSO ALPHA]( // [ACADEMY]() // [COURSES]() // [LEGAL]() [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis") 20705 Saint Charles St Saratoga, California 95070 United States (617) 337-3353