{"id":683,"date":"2026-06-25T20:36:49","date_gmt":"2026-06-25T20:36:49","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/hendersonandwilliams\/?p=683"},"modified":"2026-06-25T20:36:49","modified_gmt":"2026-06-25T20:36:49","slug":"monthly-musings-the-power-behind-the-ai-boom","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/hendersonandwilliams\/2026\/06\/25\/monthly-musings-the-power-behind-the-ai-boom\/","title":{"rendered":"Monthly Musings | The Power Behind the AI Boom"},"content":{"rendered":"

State of the markets – May 2025 to May 2026<\/strong><\/p>\n

First the markets. What a crazy ride.<\/p>\n

Although it now feels like an eon ago, markets experienced a meaningful drawdown in the spring of 2026. Most major indices bottomed between March and April before staging a sharp recovery. As of today, the rebound from those lows appears closer to roughly 15\u201325% across major global equity benchmarks, with the S&P 500 up about 17% from its recent low and broad global equity measures up by a similar mid-to-high-teens range. Markets are relatively level this week as investors digest the Iran-U.S. treaty and the market impact of the large SpaceX IPO.<\/p>\n

Global equity markets have delivered strong returns over the past year, extending a multi-year advance led by U.S. large-cap equities.<\/p>\n

The S&P 500 has returned approximately 25\u201326% over the past 12 months. The Canadian TSX Composite has gained roughly 31\u201332%, while European equities have risen in the mid-teens to low-20% range depending on the benchmark. Asian equities have also performed strongly, with broad Asia-Pacific indices up roughly 30\u201340% over the same period.<\/p>\n

Importantly, the quality of these returns has been highly concentrated. Artificial intelligence (AI) and related sectors have driven a disproportionate share of market performance. Technology and communication services accounted for roughly 60% of U.S. market gains, with a small group of AI-linked companies responsible for a large portion of returns. Nvidia alone contributed meaningfully to overall index performance.<\/p>\n

This has not been a broad-based bull market. It has been a concentrated, AI-driven cycle where capital has flowed aggressively toward infrastructure, compute, and enabling technologies.<\/p>\n

The question that matters<\/strong><\/p>\n

What if the biggest constraint on AI isn\u2019t chips, software, or even capital – but access to power?<\/p>\n

The conversation around artificial intelligence is evolving quickly, but one reality is becoming clear: AI is not just a technology story. It is an infrastructure and platform story\u2014specifically tied to energy.<\/p>\n

As demand for computing power rises, so too does demand for electricity, reliability, and grid capacity.<\/p>\n

The data behind the shift<\/strong><\/p>\n

Recent data confirms the scale of the shift already underway:<\/p>\n

Data center electricity demand rose significantly in 2025<\/p>\n

Global technology companies are committing hundreds of billions in capital to AI infrastructure<\/p>\n

Electricity demand tied to data centres is expected to continue rising sharply through the end of the decade<\/p>\n

This is important because the demand is not conjecture or speculative\u2014it is already happening.<\/p>\n

Renewables are growing\u2026 but so is the demand for everything else<\/strong><\/p>\n

There is real progress in the energy transition. Renewables are expanding rapidly and now account for a growing share of electricity generation globally. Recent milestones show solar and wind generation surpassing traditional sources at certain time periods, a meaningful signal of change.<\/p>\n

However, the broader system tells a more complex story. Total energy demand continues to grow, and conventional fuels still dominate the overall mix. This is not a transition from one system to another. It is an expansion where multiple energy sources are required at the same time.<\/p>\n

The real constraint: the grid<\/strong><\/p>\n

If there is one bottleneck emerging, it is not generation. It is delivery.<\/p>\n

Across global markets, infrastructure constraints are becoming increasingly visible. Large volumes of energy projects are waiting for grid connection. Transmission and distribution capacity is lagging demand. Grid investment must accelerate meaningfully to keep pace. In simple terms: we are building generation faster than we are building the system needed to deliver it.<\/p>\n

Canada\u2019s opportunity and challenge<\/strong><\/p>\n

Canada is not immune to these dynamics.<\/p>\n

Electricity demand is expected to grow significantly over the coming decades. The drivers are familiar: electrification through heat pumps and EVs, industrial expansion, and AI-related infrastructure. Policy direction is increasingly aligned with this reality, with plans to expand generation and modernize the grid. Increasing the supply of renewables is no longer just about climate change. It is also about remaining competitive in a world where energy capacity and economic prosperity go hand in hand.<\/p>\n

The challenge will not be identifying the need. It will be execution. Permitting, coordination, capital intensity, and workforce constraints all matter. The gap between ambition and delivery will define outcomes.<\/p>\n

What this means for investors<\/strong><\/p>\n

The key investment insight is this: the AI revolution is not just about software and chips. It is also about power. Who has it and who controls it will be a source of much success and possible conflict in the future.<\/p>\n

That creates opportunity across multiple layers:<\/p>\n

– Energy producers: nuclear, natural gas, and renewables<\/p>\n

– Utilities and power platforms<\/p>\n

– Grid infrastructure and electrical equipment<\/p>\n

– Engineering and construction firms building transmission networks<\/p>\n

– In many cases, the most durable opportunities may sit one step removed from the obvious winners.<\/p>\n

A final thought<\/strong><\/p>\n

For the past decade, investors asked how quickly the world would transition to cleaner energy. The next decade may be defined by a different question: how quickly can we build enough energy, and the infrastructure to deliver it, to support everything from electrification to artificial intelligence? Is this much different than when Canada built the railroads more than a century ago? Unlike then, the pace of change today leaves far less time to figure it out as you go.<\/p>\n

\u201cFortune favours the bold.\u201d \u2014Virgil<\/em><\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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