Artificial intelligence, or AI, is the hottest trend on Wall Street right now. Nvidia (NSDQ: NVDA) has been at the forefront of the rising tide.

As the top supplier of GPUs, chips that enable machine learning, and thus, AI, NVDA has gained about 460% since the beginning of 2023. AMD (NSDQ: AMD), the Number Two in GPU, has been no slouch either, nearly tripling in share price over the same period.

GPUs, or graphic processing units, were originally designed to accelerate graphics rendering. A popular use was in gaming. GPUs can process a very large amount of data at the same time, making them an ideal fit for machine learning, which requires many instantaneous calculations at once. Put another way, GPU has enabled the AI advances in recent years.

Of course, while GPU demand benefits greatly from the AI fervor, companies that provide other products and services also will get a piece of the growing pie. For example, because AI requires incredible amounts of computing power and uses even more electricity than cryptocurrency, generating a lot of heat. If left unmanaged, the heat could cause chips to overheat and malfunction.

This creates opportunities for companies that supply power management products such as uninterruptible power systems and power distribution switches or thermal management products such as in-room cooling fans or direct-to-chip cooling systems.

The biggest demand for such power management products comes from data centers, the critical infrastructure behind all the digital advances in the past decade plus. Data center themselves are experiencing unprecedented demand.

To give you an idea the insane growth of digital data, over the next two years, the world is expected to generate more than twice the size of the data generated in the previous ten. Not only is there need for more capacity, but the new data centers need to have more advanced capabilities to handle the needs of AI processes. Supply simply isn’t catching up with demand growth.

Moreover, the data center themselves will require unprecedented amounts of electricity. As noted above, AI processes eat up tremendous amounts of power. Traditionally, some folks have pushed the assumption that technological advances will increase efficiency and reduce energy consumption.

Sounds good in theory, but unfortunately in reality the opposite has proven to be true. The advancement in information technology has been driven by increasingly powerful chips, which consume more and more power. As a result, technological advances have increased energy consumption.

You may or may not already know this, but the growth in AI is one of the fastest drivers of demand growth for renewable energy. Indeed, one ramification of AI advances is the need to have more electricity.

Stereotypically, renewable energies may be associated with environmentalists and climate change, but a practical reason that can appeal to everyone is that for the sake of sustainability, there is simply a need to secure more sources of energy.

Of course, possible beneficiaries are not limited to companies that provide products and services to AI companies. Downstream, the potential applications of AI is so vast that it’s hard to envision an industry that won’t benefit from AI advances. From national defense to farming, to education, to retail, to health care, and to everything else you can think of, AI can help in some shape or form.

To be fair, AI is not all roses. One of the biggest threats of AI Is that automation can and will make some human jobs obsolete. It will be a new challenge for our leaders to train and teach skills to the workforce to coexist with automation. But as far as investors are concerned, AI opens up many investment opportunities.

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Editor’s Note: The gap between traditional and digital markets is narrowing, as Bitcoin (BTC) exchange-traded funds (ETFs) report massive inflows of new capital.

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