Powering AI—What Will the U.S. Do Next?
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According to Zhui Feng Trading Desk, a report released by Morgan Stanley strategist Stephen Byrd’s team on October 13 is circulating among professional investors on Wall Street. The report directly points out two major bottlenecks facing the U.S. AI industry: "power access time" and key raw materials, and also predicts major actions that the next administration may take. For investors attempting to navigate the tides of geopolitics and industrial policy in the massive AI wave, this report undoubtedly provides a critical decision-making roadmap.
The core argument of the report is that the explosive demand for AI computing power is rapidly intensifying the contradictions with increasingly strained power supplies and reliance on key materials. This risk of a “computing power desert” is forcing policymakers to elevate energy security and supply chain autonomy to unprecedented strategic heights.
Dual Bottlenecks in Energy and Materials
Morgan Stanley points out that the interconnectedness among AI, electricity, chips, and key materials is driving a series of profound changes. The report believes the U.S. government, especially a potential Trump administration, will act with great urgency to solve data center power access delays and external dependence on key materials. The breadth and depth of this dependence far exceeds market perceptions.
Morgan Stanley believes:
The convergence of these factors could lead a Trump administration to take major action in regards to 'power access time' and key materials... We see the linkages between large language models, electricity, chips, and key materials getting closer and closer, which could cause the (government's) high attention to reducing U.S. reliance on a wide range of key materials from external sources.
The report details nearly twenty types of materials that are highly dependent on external sources, from heavy rare earths and silicon carbide to lithium, graphite, cobalt, tungsten, and others—all of which are cornerstones of modern military, energy, and semiconductor industries.
Potential Policy Toolbox
Facing this severe challenge, the report speculates on a set of possible “toolbox” moves the U.S. government could adopt. These potential measures are clearly designed to reshape domestic supply chains through strong administrative intervention and clear obstacles for building AI infrastructure. The specific actions may include:
(1) Establishing an accelerated grid interconnection process for gas turbines related to data center development... so that developers bringing on new generation capacity can be prioritized for connecting data centers to the grid.
(2) Providing U.S. government support for boosting gas turbine (and potentially fuel cell) manufacturing in the U.S. and consolidating orders from large tech companies.
(3) Establishing public-private partnerships in the conversion and enrichment of nuclear fuel.
Once implemented, these initiatives would directly benefit specific companies in the power equipment, natural gas, nuclear energy, and related infrastructure sectors, forming a clear investment trajectory.
Strategic Value of “Power Access Time”
The report creatively introduces the concept of “time to power M&A” (mergers and acquisitions for access speed). As AI capabilities increase non-linearly, rapid power acquisition is becoming a highly valuable and scarce resource.
The report calculates that each year a high-performance computing data center connects to the grid ahead of schedule, its value increases by at least $4 per watt. The value of this “time arbitrage” is soaring, and companies able to provide rapid power solutions will have their strategic value reassessed by the market, potentially becoming acquisition targets for tech giants. As OpenAI’s president has warned, the entire industry is facing a “shortage of computing capacity.”
In summary, Morgan Stanley’s analysis paints a picture of the second half of the AI race: the battleground has shifted from algorithms and chips to power stations and mines. The U.S. Department of Energy has already launched the “Speed to Power initiative,” signaling a shift in policy direction.
For investors, closely tracking companies capable of solving energy and materials bottlenecks—and which may gain national support—could be the key to obtaining excess returns in the next stage.
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