Doc's note: In 1988, we got our first glimpse of what happens when the supply of technology can't keep up with increasing demand.
Today, my friend Joel Litman – from our corporate affiliate Altimetry – tells that story and explains how it's happening all over again... on a much larger scale...
The unnamed man is 1,000 miles from his home in Indiana, swallowed up by the streets of New York City...
He has one mission in mind. Every day, he ducks into several different electronics stores. Every time, he asks the same question.
And every night, he walks back out into the cold, empty-handed.
All of this work is for a single gray plastic cartridge containing Super Mario Bros. 2.
It's Christmas 1988, and the Nintendo Entertainment System has turned living rooms across America into little arcades. It's the hottest game console in the country.
But its two new video games – featuring popular characters Mario and Zelda – are nowhere to be found.
"I've done seven stores a day for three weeks now," the man tells ABC News...
And yet, he can't find what he's looking for.
Waiting in line at the same video store, another woman chimes in...
I have to live with my kids for the rest of the year. So I have to have this on Christmas day.
Across the country, the scene plays out again and again. Parents suspect Nintendo is behind the shortage. Maybe it's holding back copies to drum up more demand.
Plenty of fads had used that trick. And plenty of tired parents had fallen for it.
But Nintendo is just as frustrated.
The truth is, it can't get enough chips...
The memory business is a bloodbath.
Nintendo consoles used to run on a cheaper form of memory called static random-access memory ("SRAM"). Computers used dynamic random-access memory ("DRAM"). (In fact, they still use it today.)
A few years earlier, in 1985 and early 1986, chips sold for less than $3. U.S. chipmakers lost as much as $5 billion. Many went out of business.
DRAM was the real issue. Japan dominated the market in the 1980s. By 1986, the U.S. cut back on Japanese imports to help its domestic firms stay afloat.
Unfortunately, all that did was cause a massive shortage.
The cost of DRAM skyrocketed as high as $12 per chip. Corporate clients were willing to pay just about any price... and chipmakers could smell a fortune brewing. They cut their SRAM production in favor of DRAM.
The move left Nintendo with a painful choice. It stopped making 12 older games to free scarce chips for its new releases.
Even still, it couldn't keep up with holiday demand that year.
Desperate parents were left hopping from store to store, lines wrapping around the block... all to avoid the wrath of their tiny video-game enthusiasts.
We're looking at a similar memory bottleneck today – on a much larger scale...
Chip demand has exploded thanks to AI. But so has demand for something else entirely...
In the late 1980s, chipmakers could charge whatever they wanted for their goods. Today, something similar is happening in energy infrastructure.
That's because AI's biggest bottleneck right now isn't chips – it's electricity.
My team and I have been tracking this trend for months. The grid can't support Big Tech's ambitions. So these industry giants are funneling cash into their own "shadow grid"... and in the process, they're setting up a select handful of stocks to soar.
Get the full story here (includes four free recommendations).
Whoever controls electricity will control the next phase of the AI boom. The companies in this critical corner of the market are sitting in the power seat.
Keep an eye out for opportunities.
Regards,
Joel Litman
