Markets sit near record highs even with inflation worries and geopolitical risk hanging underneath. The main question right now is how to trade around the AI boom, and the best answer is to buy the infrastructure behind it. Energy is the clearest "picks and shovels" play on AI.
Why energy over AI companies
There is a long gap between betting on AI software and betting on the power that runs it. It stays very hard to know which AI company will win, which revenue model works, or whether one firm or several take the market. The underlying infrastructure, and the energy that infrastructure needs, will be there no matter who wins. So the safer trade is the power, not the software.
The focus is solar energy development. A private credit fund lends to solar developers, helps them finish building their projects, and helps them sell those projects. Much of that output goes toward residential power. The goal is to hold energy prices at or near current levels and shield them from the inflation the AI boom is pushing into infrastructure.
Solar without subsidies
There is a basic demand for power in the US, and solar and other alternative energy remain the cheapest way to put electrons on the grid, cheaper than coal and cheaper than gas in many cases. Government policy has shaken the market: the "one big beautiful bill" changed federal support for alternative energy, and the ability to grandfather deals under the IRA will fade over the next 12 months. Even so, the supply-and-demand mismatch is so large, and green energy so often the cheapest to deliver, that demand and the capacity of developers to build will hold. The opportunity stays open for years.
Carbon-negative power as a selling point
One project is a biomass and carbon capture plant in northeast Louisiana that produces 70% carbon-negative electricity. The biggest problem data center developers face is winning public support, which is really a political problem. When a project creates local jobs and local, ideally carbon-neutral power close to the data center, local backing improves a lot.
This site sits in one of the poorest farming counties in the US, an area hungry for jobs and opportunity, and it happens to be next to a very large AI data center that needs power. Tying in public opinion and winning local support is what lets a project succeed, and the clean power is one piece of that.
The affordable housing shortage
Affordable rental supply has dropped sharply over the past decade. A recent Harvard study found a fall of about a third, a little under 10 million rental apartments, over the last 10 years at rents below $1,400 a month. That is a huge affordability shift in a short time, and it happened even though rates were near or at zero for the first 5 of those years.
After the Fed started raising rates in March 2022, new apartment development fell fast. The deeper cause is structural: building homes in the US stays very expensive, and the higher-rate environment made it worse. The shortage may get worse before it gets better.
The fix will come from technology, mainly the ability to build homes cheaply, and manufactured homes in particular offer the best path to more affordable housing supply. This problem has been discussed for years and is now embedded in the economy, with people almost used to it, but it remains a real concern.
