4 Factors Make Infrastructure a Superior Investment to AI

The Facts -

• Investor Steve Eisman sees infrastructure as a promising sector for investment due to several key factors.
• Eisman identifies four main drivers: a post-COVID push towards onshoring, the industrial implications of artificial intelligence, electric grid improvements and greenification.
• Eisman is skeptical about certain aspects of green energy and has no faith in the potential of cryptocurrencies.

Steve Eisman Eyes Infrastructure as Winning Sector

Notable investor Steve Eisman, known for his subprime mortgage bet captured in "The Big Short," is currently investigating infrastructure as a significant potential investment opportunity.

During his appearance on the Odd Lots podcast, Eisman, a senior portfolio manager at Neuberger Berman, detailed his bullish position on infrastructure, citing four main factors behind its potential as a long-term investment.

"This whole group now has a real secular story. They're cyclical, but they have secular tailwinds that will last a long time," he stated.

The top four drivers include a post-COVID trend towards onshoring, with Eisman suggesting that this shift is only beginning and will continue for the next decade. As an example of a company benefiting from this trend, he mentioned Eaton, even though he doesn't own it personally.

Another driver is the industrial consequences of artificial intelligence use. New microchip technology that powers AI requires three times more electricity than a CPU, potentially triggering tenfold growth in power demand by 2026, according to JPMorgan.

Eisman also emphasizes the role of electric grid improvements and spending due to the new technology's heat generation, requiring better cooling systems in data centers.

Lastly, Eisman cites that the ongoing greenification and shift towards renewable standards is another sustaining tailwind for the sector. He warns, however, the fundamentals for residential solar are too poor for speculation.

Eisman also pointed out the critical role of the United States having an industrial policy, with the combination of the IRA and the IIJA contributing about $1.2 trillion over 10 years.

Eisman's optimism for AI is limited to a few obvious winners, while he views the rest as hype or potential. Conversely, he doesn't see potential in crypto, considering it as purely speculative.

---
Read More USA Works News