By Tim Russell (President & Wealth Manager) at Life Financial Group
Originally shared on the Life in the Markets podcast — 2/6/2026

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The AI Spending Surge

Companies like Amazon, Alphabet, Microsoft, and Meta are expected to spend $650–$700 billion in 2026 alone on artificial intelligence infrastructure.

That is an astonishing figure.

These investments assume something critical: That AI will generate profits large enough [and fast enough] to justify the spending.

  • Long term? Possibly.
  • Short term? That’s less certain.

Not every hyperscaler will win. Not every AI investment will pay off. And even if demand remains strong, there is a bottleneck forming that investors are only beginning to appreciate.

 

The AI Power Gap

AI is incredibly energy intensive. The chips powering large language models and advanced computation consume enormous electricity. And the data centers housing them require continuous, reliable power.

Here’s the issue: By 2028, new data centers are projected to require 44 gigawatts (GW) of additional power capacity. Currently, only about 25 GW are scheduled to come online. That leaves a serious gap.

Either:

  • Fewer data centers get built,
  • Profit margins shrink due to higher energy costs,
  • Or we rapidly expand energy production.

Something has to give.

 

Power Is Already Showing Up in Inflation

Recent inflation data revealed an interesting detail: Oil prices have declined year-over-year. But electricity and utility costs have risen significantly.

Energy generation, not gasoline, is becoming the pressure point. If AI demand continues climbing, electricity pricing becomes even more important for households and businesses alike. The market may be pricing AI growth. It may not be pricing energy constraints.

 

How This Could Be Solved

This is not a doom-and-gloom scenario. It’s a solvable problem. But it requires execution. Here are three realistic pathways:

1. More Energy-Efficient Chips

For decades, chip innovation followed Moore’s Law: smaller size, greater speed. Now physics limits further miniaturization. So the focus is shifting to energy efficiency. If chip manufacturers can produce more computational output with less power demand, the entire AI ecosystem becomes more sustainable. Efficiency may become the new frontier.

2. Faster Power Plant Approvals

It currently takes an average of five years to bring a new power plant online. Regulatory reform could accelerate energy development, reduce bottlenecks, and stabilize costs. If AI is strategic infrastructure, energy policy must reflect that reality.

3. Small Modular Reactors (SMRs)

Nuclear energy is back in the conversation.

Small Modular Reactors (SMRs) are compact nuclear systems already used in submarines and aircraft carriers. They are scalable, efficient, and carbon-free.

If deployed alongside AI data centers, SMRs could:

  • Add net new energy to the grid
  • Stabilize long-term power costs
  • Strengthen energy independence

This may be one of the most realistic long-term solutions.

 

Is There an AI Bubble?

There are certainly bubble-like characteristics in parts of the AI trade.

  • Valuations are stretched.
  • Spending is aggressive.
  • Profitability timelines are uncertain.
  • Infrastructure constraints are real.

AI is facing headwinds. But AI is not going away. It is transformative technology. It will reshape industries. It will change workflows. It will create efficiencies we can’t fully see yet. The question isn’t whether AI survives. The question is whether expectations adjust before infrastructure catches up.

 

A Christian Perspective on AI

As believers, we must think clearly about technology. Artificial intelligence can be powerful. It can be helpful. It can also create ethical and societal challenges. But let’s remember something foundational:

Artificial intelligence can never replace the image of God implanted on the human heart. We cannot create a technology greater than we are. And we were created by God. God is the Creator of all things. There is no scenario where a human invention surpasses the dignity, worth, and divine imprint placed upon humanity.

AI is a tool. It is not sovereign. It is not ultimate. It is not transcendent.

Rather than fear “AI overlords,” Christians should engage the technology, shaping it, guiding it, and using it wisely for human flourishing and the glory of God.

As Philippians 4:8 reminds us:

“Whatever is true, whatever is honorable, whatever is just, whatever is pure, whatever is lovely, whatever is commendable… think on these things.”

Let’s approach AI with wisdom, not anxiety.

 

Final Thoughts

AI has a power problem. That problem may restrain growth. It may shift capital. It may alter market expectations.

But it is also an opportunity: An opportunity to modernize our grid. An opportunity to innovate energy efficiency. An opportunity to lead responsibly.

The markets will adjust. Technology will evolve. And God remains sovereign over it all.

Be thoughtful. Be disciplined. And be safe in the markets.

 

 

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Disclaimer: The topics discussed here are for informational purposes only and do not constitute specific investment advice. Investing involves risks, including potential loss of principal. Past performance does not guarantee future results. Securities and advisory services offered through Geneos Wealth Management, member FINRA/SIPC.