Editor's note: Some of the best AI investing opportunities come from the manufacturing side...
Most folks don't consider what goes into producing the chips used in data centers. But without the natural resources to manufacture them, the semiconductor industry would grind to a crawl.
In today's Masters Series issue, originally published in the April 14 issue of the free Chaikin PowerFeed daily e-letter, Pete Carmasino, chief market strategist at our corporate affiliate Chaikin Analytics, shares one overlooked noble gas behind the AI boom...
This Noble Gas Helps Determine the AI Megatrend's Future
By Pete Carmasino, chief market strategist, Chaikin Analytics
Pattillo Higgins knew Sour Spring Mound didn't just stink...
It held the key to making Texans rich.
These days, Texas is the poster child for the U.S. oil and gas industry. But that wasn't the case in the late 1800s. At the time, most of America's oil and gas came from Appalachia.
Sour Spring Mound was a small, sulfurous hill in Beaumont, Texas.
The locals gave it that name because of its pungent smell. Natural gas routinely seeped to the surface. And the neighborhood kids sometimes set the ground on fire.
Higgins believed the smell came from a massive oil reserve beneath the hill.
So he got to work...
In 1898, Higgins hired a mining engineer to help him dig wells. If they struck oil, they hoped to get 50 barrels per day out of the hill.
On January 10, 1901, Higgins and the mining engineer hit the jackpot...
First, the well spat out a bunch of mud. Then, it threw six tons of drilling pipe over the derrick. As the drilling team cleaned up the debris, a roar came from below the earth.
In a 2017 article, the New Yorker detailed what happened next...
More mud flew up, followed by rocks and gas and then by oil, which spouted [150] feet into the air: a black fountain surging from the arterial wound that the drillers had made.
It was the greatest oil discovery in history.
For the next nine days, until the well was capped, the gusher spurted into the air [100,000] barrels of oil a day – an output that exceeded the production of all the other wells in America combined.
After the first year of operation, the well, which Higgins named Spindletop, was producing [17] million barrels a year.
The discovery of oil beneath Spindletop launched the American petroleum boom in 1901. Now, Texas produces the most oil of any state by far – about 2 billion barrels per year.
And it all started with a foul-smelling hill along the Gulf Coast near Louisiana.
More than a century has passed since Higgins' efforts led to the discovery of oil at Spindletop. Today, the location serves a different – yet just as critical – purpose...
It's the world's largest storage facility for helium.
And folks should be paying attention to this noble gas right now...
Most regular folks associate helium with balloons. But the element is far more important than your kid's birthday party. It's a key driver in the modern economy...
This irreplaceable gas has the lowest boiling point of any element.
That makes it the go-to coolant for some of the world's most sensitive technologies. I'm talking about things like MRI machines, superconducting magnets, and space rockets.
The most pressing demand for helium comes from the semiconductor industry...
Throughout the chipmaking process, companies use helium for many purposes. It's needed for lithography, sanitary material transport, and for cooling and anti-rust treatments.
In short, it's impossible to make chips at scale without helium. So in turn, it's one of the most critical elements in the race to build out AI infrastructure.
But there's a big problem...
While demand is soaring, the helium supply chain looks precarious today.
Qatar is a major helium producer. But the war with Iran has drawn in the Middle Eastern country. And nearly a third of the world's helium supply hangs in the balance.
Meanwhile, America's Federal Helium Reserve contained more than 1 billion cubic meters in the mid-1990s. But the reserve was so deep in debt that Congress began phasing it out.
It's now all gone.
As of the past couple of years, it's up to private businesses to provide the helium for America's AI ambitions. And the ones that can step up will be able to name their price.
So keep a close eye on helium producers.
And that's not all...
More broadly, the companies that produce this essential element sit in the chemicals industry. And today, the Power Gauge says this industry is "strong."
Our system rates 77 stocks in the space. Of those, 37 are "bullish" or better. Only four are "bearish" or worse. The rest are in "neutral" territory.
Put simply, it's a great setup for helium producers right now. And the Power Gauge sees a big opportunity with the broader chemicals space, too.
Good investing,
Pete Carmasino
Editor's note: A hidden threat is breaking out in the AI market. And not even the "old guard" AI companies are safe. But two investing legends have found a silver lining. On April 29, they're showing what they believe is the greatest wealth-creation opportunity in their combined 90 years of investing. Click here for more details.
