AI backlash and datacenter power demands, plus an inspiring July 4th message
by Scott Martindale
CEO, Sabrient Systems LLC
Today, I’d like to reprint a couple of brief excerpts you might have missed from my lengthy June Sector Detector post on 1) the public backlash to AI and 2) how the growing demand for electricity to power datacenters is being addressed in the face of NIMBYism.
And then in my Final Comments section, I share an inspiring message in honor of America’s 250th anniversary from The Rational Optimist Society on Substack, which believes human progress and innovation—most of which originated in the USA over those 250 years—consistently improve living standards for all.
Happy Independence Day!
AI backlash:
Politically speaking, particularly heading into the midterms, public pushback is growing regarding two key issues that impact average Americans: 1) job losses (you’ve seen the layoff announcements, with recent college grads seeing rising unemployment), and 2) strain on the power grid (for massive datacenters) leading to rising electricity costs and utility capex for expansion (i.e., costs that must be recouped from customers). This threatens continued hyperscale capex growth.
Markets view AI as a transformative productivity engine capable of driving extraordinary corporate profitability, worker productivity, and long-term economic growth. Simultaneously, many workers increasingly view this technology as a direct threat to their employment stability, compensation growth, and professional relevance. The challenge is not merely understanding AI as an investment theme; it is understanding AI as a macroeconomic force with implications for labor markets, consumption patterns, political sentiment, and long-term capital allocation. The same innovation driving stock market euphoria is also contributing to broader societal anxiety—particularly among middle- and upper-middle-income knowledge workers who historically have formed the backbone of resilient consumer demand. At graduation speeches, many young people boo when AI is mentioned.
With community sentiment against AI real and worsening, a populist backlash and anti-AI legislation can’t be far behind—which would leave China a clear path to AI dominance and control, much like their stranglehold on other critical national security areas, like manufacturing and rare earth elements mining and processing. This has become the biggest risk to the powerful AI trade, much the same as every previous disruptive technology wave, from railroads to the Internet, when the public feared the impact on their families and livelihoods. Nevertheless, the fundamental story seems too strong, the benefits too entrancing, the capital commitments too large, and the competitive dynamics (including national security interests) too urgent to derail this train.
Economist Ed Yardeni recently wrote, “We disagree with the widely held notion that AI is a net job killer. In our opinion, AI will create jobs on balance. Humans will use AI to achieve greater output at lower cost, creating a wealthier society that needs more and newer types of human labor. We agree with Jevons' Paradox: Making a production input more efficient lowers the cost of the final product, stimulates demand for it, and ultimately results in greater demand for the input itself, despite the productivity gain.”
Famed futurist George Gilder recently wrote, “As productivity rises, possibilities multiply and people demand more—and better: housing, health care, entertainment, education, travel, food…. Wealth increases with productivity; as wealth increases, new forms of demand emerge…. After averaging roughly 1% to 1.5% annually for much of the past two decades, U.S. productivity growth recently accelerated to 2.7%. That’s enough to make economists talk about a possible productivity boom, readily translated into better products, lower prices, shorter workweeks, and entirely new industries…. Going back as far as we have data, productivity gains have repeatedly been converted into some combination of higher wages, lower prices, new industries, better products, and more leisure…. The purpose of technology is not to create [or eliminate] jobs. It is to create abundance.”
And abundance means that the proverbial “economic pie” grows, living standards rise, leisure time expands, new industries emerge, and new jobs are created. In a nutshell, AI will be a tool to enhance worker productivity and grow the economic pie, not do away with workers or replace them with robots.
Entrepreneur David Friedberg of the All-In Podcast crew sees this growing negative sentiment as a real concern. He recently laid out three drivers for it, which he believes must be addressed:
“First, I think that there's like an underlying view that: a) Technology creates leverage for a small group of people, which creates power imbalances, and nothing represents that more than AI. b) A small number of people that control, profit from, and benefit from AI are going to end up getting outsized returns relative to the broader population… c) The [rapid] time to diffusion here is such that it's going to be extremely asymmetric for society... For example, nuclear bombs really created this moment in people's minds in the mid-20th century that, by the back half of the 20th century, gave everyone a high degree of skepticism about technology and science generally: that those who have the knowledge and those who engineer solutions with the knowledge can create outsized advantages for themselves, and it puts the rest of us at risk—the rest of the world, the rest of the population—at risk. And because those questions about ‘when does this benefit me, how does it benefit me’ can't be answered today, the economic benefit that's accruing to the few today becomes the narrative…that a few people take from the many. And so, there's something deeply disturbing for the average person about that. They don't understand how it works, why it works, what it'll do for them, when it will do it, and all that they're being told is that some people are making trillions of dollars. So, I think it's pretty obvious why this has got such a backlash.”
“…Secondly, I think that there's a deep amount of external energy that's fueling this anti-technology sentiment in the United States and has been for decades. I don't think it's just China with NGO's today. I think that there is a long history of state actors intervening in media activities in foreign nations to try and create the sentiment and fuel the sentiment that reduces progress in that competitive state. I think this goes all the way back to KGB design during the Cold War and it's been refined and honed and improved over time. This is not just some conspiracy theory. There are plenty of great books about this. The techniques of what's going on specifically today, …I don't have any great details on that. But I [think there is] foreign interest in seeing technology advancement slow in competitive nations. The United States probably does similar things to other nations. And I think that that's probably a key part of [what we are seeing].”
“…And then I think a third piece is like when the Copernican Revolution happened, it was…like heliocentricity was a totally new way of thinking for humans and it was deeply disruptive to the Church, and it was deeply disruptive to the power centers to tell people Earth is at the center of the universe. We're in control. We're the direct channel to God. And the idea that the Sun is at the center of the solar system and we spin around it and we're a tiny speck in the universe was very hard for people to grasp. There's something about AI [that seems] not human-centric, and it kind of shifts and messes with the ego of the human. It's almost anti-humanist and I think that that's like a deep psychological current a lot of people and their disdain for this technology… It's not the cause but I think it fuels it. So, I think there's a lot of complicated aspects to this… and there's a real set of global competition underway where you know various state actors and interests are competing with each other.”
Venture capitalist Bill Gurley advises: “Historically, innovation has led to more prosperity for humans…And I see no reason why that won't happen today. But in the short run, from a bottom-up perspective, every human that wants to protect themselves needs to be the most AI-enabled version of themselves they can be. And the people that might be a threat of job loss are someone who stands hard, fast, and refuses to use AI. And I would just say that's simply like saying, I'm not going to use email. I'm not going to use a spreadsheet. I'm not going to use a computer."
Entrepreneur and venture capitalist David Sacks: “Proficiency in Claude [by Anthropic] is the most marketable skill right now in the economy. People are using these tools in entirely new ways. I think that we're at the outset of a boom caused by bespoke software proliferating throughout the economy and being used by firms that never thought of themselves as tech firms before. All of which is leading to more productivity, and that leads to a healthier economy, and that leads to more job creation.”
Economist Ed Yardeni sees AI as more like a productivity-enhancing force than a job-destroying force. Aside from job losses in entry-level white-collar jobs (e.g., junior programming, data-entry, or routine work), he cites continued labor-market resilience, “rewiring” work for productivity/efficiency gains, complementary effects on skilled workers (amplifying expertise and experience), job creation from AI infrastructure investment (skilled trades and construction labor), employer retraining (rather than layoff) efforts, and strong earnings/economic growth despite rapid AI adoption. Notably, despite recent announcements of layoffs in some fields (mostly involving repetitive work) and fears of AI-driven job losses and reduced hiring of college grads, Bank of America just hired 2,000 summer interns and another 2,000 full-time entry-level analysts—and the bank says its 18,000 software developers have become 20-25% more productive from AI.
Datacenter power demand and the NIMBY problem:
AI datacenters have become one of the more controversial AI talking points for the general public, and the hostility towards their construction is growing fast (Not in My Back Yard!, aka NIMBY). While both Elon Musk and Google have pushed space-based options, those are still far from reality, making the ocean an interesting and more realistic alternative. Peter Thiel just led a $140M Series B for Panthalassa, an Oregon-based startup that builds autonomous floating compute structures powered by ocean waves, with 85-meter steel node bobs in open ocean, converting wave motion into electricity for onboard AI chips, all cooled naturally by seawater, and beam AI results back via SpaceX’s Starlink.
For now, natural gas is the best option to fuel electrical power generation as a relatively clean, plentiful, and readily available energy source. Gas production in the Permian Basin has doubled since 2018, reaching 25.4 billion cf/day in 2025, according to the Energy Information Administration. The region now accounts for 22% of total US marketed natural gas production. But because gas is a byproduct of crude oil production, supply growth has consistently outpaced pipeline capacity. As a result, at least 11 newbuild or expansion pipeline projects are completed, under construction, or in advanced planning stages. In fact, over the next five years, the demand for midstream infrastructure is entering what analysts are calling the "biggest buildout surge in 20 years."
This massive buildout of gas transportation infrastructure is driven by the convergence of surging Permian production, growing LNG export demand, and the growing power requirements of datacenters. But the single largest driver for new pipeline and terminal capacity is the massive expansion of LNG exports. US export capacity is on track to rise 80% by 2028 as a fleet of new Gulf Coast terminals (like Golden Pass and Rio Grande LNG) come online. US natural gas exports are forecast to grow by nearly 30% by next year, reaching over 20 billion cf/day), according to the EIA.
One obstacle to datacenter construction is that someone has to pay for the increased energy demand. Early on, it meant power plants passing along the costs to consumers. Not surprisingly, consumers began to push back, petitioning against having datacenters in their communities, even if it could provide an economic benefit. But the NIMBY problem runs deeper than just electricity bills. Communities are objecting to the physical footprint of new transmission lines, substations, and power infrastructure that large-scale datacenter development requires. The problem is about transmitting power, not just generating it. That's why President Trump called on hyperscalers to produce their own power (i.e., build their own power infrastructure) in his 2026 address to Congress.
According to Infrastructure Capital, “Northeast electricity prices have climbed to among the highest in the nation, driven by constrained natural gas supply, the retirement of coal and nuclear plants, and surging demand from data centers and electrification mandates.” Two pipeline projects taking natural gas to energy-starved northeast states have been revitalized after previously being blocked by New York state regulators, and the DOE is incentivizing electricity transmission modernization to enhance capacity and reduce friction losses.
The location of new datacenters is increasingly driven by proximity to natural gas production rather than traditional factors like network latency and land cost. Companies are building facilities near natural gas basins where on-site electricity generation eliminates dependence on the broader grid. This shift is creating new demand centers for natural gas that did not exist five years ago, actively supported by the Department of Energy. SpaceX recently disclosed that COLOSSUS and COLOSSUS II run primarily on natural gas and gas turbine technology.
Gas turbines are the fastest, most scalable way to feed a datacenter demanding 100 MW or more, which describes every serious AI training cluster being built today. But supply chain constraints for sophisticated natural gas turbines remain a challenge. Today’s natural gas turbine manufacturers must master metallurgical superalloys, complex internal air-cooling channels, and micro-machined coatings to withstand firing temperatures exceeding 2,600 degrees Fahrenheit—which is well above the melting point of the metals themselves, according to the Institute of Energy and the Environment.
But federal efforts to streamline permitting at both FERC and DOE are designed to reduce approval timelines. Moreover, the Trump Administration’s energy policy framework explicitly favors dispatchable baseload power projects (like natural gas, nuclear, and geothermal) over intermittent renewable sources (like solar and wind). For midstream pipeline operators, the convergence of Northeast affordability concerns, datacenter demand, LNG export growth, and favorable federal policy creates a multiyear investment cycle.
GE Vernova (GEV) is the dominant maker of industrial gas turbines in the United States. The company's Electrification segment, which includes HVDC systems, substations, switchgear, and transformers, essentially provides the complete infrastructure stack that a hyperscaler needs to build a self-sufficient power ecosystem. In Q1 alone, GEV booked $2.4 billion in electrification equipment orders specifically to support datacenters, which is more than all of 2025 combined, and its turbine backlog has been climbing steadily. Also, every turbine the company sells turns into a recurring services and maintenance customer for decades. As SpaceX and the broad AI industry demand more turbines, that services backlog compounds in tandem.
Of note, Chevron (CVX) and Microsoft (MSFT) just announced $7 billion Project Kilby in Texas, a 2.67 GW natural gas-fueled plant sourced from the Permian Basin. Expected to come online in 2028, it will be Microsoft’s datacenter campus, while Chevron owns and operates the power plant and GEV builds the turbines.
But ultimately, the tremendous power requirements of AGI (or even ASI) will go well beyond what we can (or should) burn hydrocarbons to provide. No, we will need nuclear fission. Indeed, the Trump administration’s ambitious American Energy Dominance agenda includes having 10 GW of large reactors under construction by 2030 and quadrupling our nuclear generation capacity from roughly 100GW today (94 operable reactors in 54 power plants across 28 states) to 400GW by 2050. Or preferably it will entail the holy grail of nuclear fusion.
Or even better yet, perhaps we will realize the dream of today’s entrepreneurial visionaries—like the inimitable Elon Musk of SpaceX (SPCX), Planet Labs (PL) CEO Will Marshall, Starcloud CEO Philip Johnston, and Axiom Space CEO Kam Ghaffarian—to create a constellation of orbital datacenters powered directly by the sun (where there are no clouds or weather to disrupt it)—with enough left over to beam back to Earth. According to Elon Musk, “You can manufacture solar radiators on the Moon from lunar materials. We could probably do around 1 terawatt per year of AI space compute from Earth, but 1,000 terawatts or more from the Moon—a truly staggering number.” For reference, the world currently consumes 3.5 TW of electric power (out of 15-20 TW of total primary energy consumption including gasoline, heating oil, and industrial processes).
Or perhaps we will realize George Gilder’s “post-chip” vision of a superconductive material like graphene that could house an entire datacenter on a single 12”x12” wafer, drastically reducing power requirements by eliminating bulky packaging, sprawling server farms, and energy-intensive communication bottlenecks (i.e., moving data between discrete GPU chips via copper wires).
Indeed, if we get out of own way—with our hyper-dysfunctional political climate that has gotten so bad that we have one side (“the resistance”) openly trying to undermine the success of the party in power (and by extension, the success of the country)—perhaps we unite as a nation to stop the malinvestment of wars, boondoggles, and expansion in unproductive (zero-ROI) entitlement spending, fraudulent claims, and NGOs, and instead allow the magic of an unleashed, incentivized private sector to do its thing in creating disruptive innovation and productivity gains from so many amazing and previously unthinkable but now rapidly advancing technologies.
These include Generative AI, artificial general intelligence (AGI), quantum computing, cloud computing, blockchain, cryptocurrency, digitization, tokenization, ecommerce, video conferencing, augmented/virtual reality (AR/VR), computer vision (CV), gaming, networks, sensors, 3-D printing, robotics, automated manufacturing, autonomous vehicles, horizontal drilling & fracking, renewable energy, advanced battery storage systems, fuel cells, small modular nuclear reactors, microreactors, Gen IV large-scale nuclear plants, the “holy grail” of nuclear fusion, electric/hydrogen transportation, space exploration, off-earth settlements, in-situ resource utilization (ISRU) and closed-loop systems, orbital and subsea datacenters, space-based solar power, cybersecurity, decentralized finance (DeFi), fintech, nanotech, biotech, telehealth, precision medicine, computational biology, genomics, genetic sequencing, biologics, and the rapid development of diagnostics, therapeutics, and vaccines that may render obsolete pandemics and many viruses and diseases.
I discussed the history of energy, today’s surging demand, likely solutions, key companies, and Sabrient’s top Energy sector picks, in my special report, The Future of Energy: The Lifeblood of an Economy. Also, Sabrient founder and former NASA engineer (Apollo Program) David Brown and I discuss the history of space exploration, its future including off-Earth settlements, key companies, and Sabrient’s top stock picks, in another special report, A New Race for the Final Frontier: Space Exploration and Off-Earth Sustainability. You can find both at:
https://MoonRocksToPowerStocks.com.
Final comments:
Let me close by sharing a message from The Rational Optimist Society on Substack, which believes human progress and innovation consistently improve living standards. “Freedom leads to innovation and innovation leads to prosperity for all. People around the world are now wealthier, healthier, less violent, better fed, safer, and more literate than ever… But too many have forgotten what got us here. Prosperity is no accident. Its enemies—alarmism, ideology, and bureaucracy—are on the rise. We must defend our values, or risk slipping back into darkness and stagnation. Our near future will be incandescently bright, as long as we fight for it …[and] a better world is not only possible, but probable, as long as we celebrate and prioritize what’s brought us this far: freedom, innovation, science, and reason.”
Co-founder Stephen McBride recently wrote this post in honor of America’s 250th anniversary, “America, You Saved My Life: A love letter from a Dublin kid.” It is a brief but inspiring essay about how most of the world’s amazing progress over the past 250 years originated in the USA and describes his “five frontiers” of life-sustaining/improving innovation today driven by American entrepreneurs.
As a reminder, you can download (PDF format) Sabrient founder and former NASA engineer (Apollo Program) David Brown’s book, Moon Rocks to Power Stocks: Proven Stock Picking Method Revealed by NASA Scientist Turned Portfolio Manager, which reveals Sabrient’s process-driven, active-selection methodology, plus the bonus reports, by clicking the image below. Or to skip the book and go straight to the Scorecards subscription offer, click here.
Disclosure: At the time of this writing, the author held no positions in the securities mentioned.
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