Positioning for the AI Infrastructure Supercycle: Energy, Tariffs, and Onshoring

The AI revolution is no longer a distant promise—it's a seismic force reshaping global energy demand, supply chains, and infrastructure priorities. By 2025, the U.S. is at a pivotal crossroads where artificial intelligence, energy policy, and trade dynamics collide. With Donald Trump's return to the White House, the stage is set for a strategic realignment of domestic infrastructure, energy production, and manufacturing. For investors, this convergence creates a unique opportunity to position for a supercycle in AI infrastructure, driven by onshoring, energy demands, and a regulatory environment that favors U.S.-based energy and grid modernization.

The AI Energy Boom: A Perfect Storm of Demand and Policy

Artificial intelligence's insatiable appetite for electricity is already straining global grids. Data centers now consume 2.5% of U.S. electricity, a figure projected to surge to 7.5% by 2030. A single AI inference query, such as a ChatGPT response, uses 10 times the energy of a Google search. Multiply this by the billions of daily interactions, and the energy implications are staggering.

Trump-era trade policies have accelerated onshoring of AI infrastructure, but they've also introduced volatility. Tariffs of up to 145% on Chinese imports have inflated costs for data center components like cooling systems and backup generators. However, exemptions for semiconductors and GPUs have provided some relief to the tech sector. The administration's focus on energy independence—reopening coal plants, fast-tracking nuclear reactors, and prioritizing domestic uranium and natural gas—has created a parallel boom in energy infrastructure.

Grid Modernization: The Hidden Goldmine

The U.S. electrical grid is ill-equipped to handle the AI era's energy demands. Trump's $70 billion AI and energy initiative, announced in late 2024, is a game-changer. It allocates massive funding to modernize the grid, with a focus on siting data centers near coal and nuclear plants. This strategy not only ensures reliable power but also leverages existing fossil fuel infrastructure to meet AI's 24/7 energy needs.

Blackstone's Infrastructure Fund (BX) and Dominion Energy (D) are already capitalizing on this shift. Blackstone's $4.2 billion acquisition of Dominion's gas assets underscores its grid-play focus. Meanwhile, Dominion's nuclear expansion plans align with the administration's push to classify nuclear energy as “defense-critical” infrastructure.

Nuclear and Coal: The Unlikely Winners

While renewables face headwinds under Trump's regulatory clampdown, nuclear and coal are experiencing a renaissance. The administration has fast-tracked small modular reactors (SMRs), with the Department of Energy targeting 16 federal sites for AI data center partnerships by 2027. ExxonMobil's Westinghouse division and NextEra Energy are key players in this space.

Coal, long maligned by climate advocates, is being rebranded as a strategic energy source for AI hubs. Peabody Energy (BTU), the largest coal producer in the U.S., is seeing renewed demand as plants are retrofitted to support data centers. The administration's rollback of NEPA permitting requirements has further accelerated project timelines, making coal and nuclear more competitive.

Tariffs, Onshoring, and the Resilience of U.S. Manufacturing

Trump's tariffs have created a paradox: while they increase costs for data center components, they also force companies to onshore production. This has led to a surge in domestic manufacturing for AI infrastructure, with companies like Unusual Machines Inc. (UMAC) leading the charge. UMAC's $48.5 million capital raise and acquisition of an Australian drone motor manufacturer highlight its pivot to U.S.-based AI-driven energy solutions.

The company's vertically integrated model and focus on AI-enhanced drone systems for grid monitoring position it to benefit from both onshoring and the energy transition. UMAC's inclusion in the Russell Microcap Index and its defense sector partnerships further validate its growth potential.

Investment Strategy: Balancing Risk and Reward

For investors, the key is to hedge against policy volatility while capitalizing on long-term trends. Here's how to position your portfolio:

1. Grid Infrastructure Firms: Prioritize companies with diversified revenue streams and strong state-level contracts. Blackstone (BX) and Brookfield Infrastructure (BAM) are well-positioned to benefit from grid modernization.
2. Nuclear and Coal Players: ExxonMobil (XOM) and Peabody Energy (BTU) offer exposure to energy security plays, while NextEra Energy (NEE) bridges nuclear and renewable energy.
3. Energy Storage and Grid Tech: As renewables become a larger share of the mix, companies like Enphase Energy (ENPH) and Tesla (TSLA) are critical for addressing intermittency.
4. State-Level Resilience: Focus on companies operating in states with robust renewable mandates, such as NextEra in Florida or Dominion in Virginia.

The Bottom Line

The AI infrastructure supercycle is inevitable, but its trajectory depends on how the U.S. navigates energy, trade, and geopolitical challenges. Trump-era policies have created a fertile ground for companies that align with onshoring, energy security, and grid modernization. While tariffs and regulatory shifts introduce short-term risks, they also create long-term opportunities for firms that can adapt to a more insulated economy.

For investors, the time to act is now. The winners in this supercycle will be those who recognize the interplay between AI's energy demands, the urgency of grid upgrades, and the strategic repositioning of U.S. manufacturing. The future isn't just about smarter algorithms—it's about building the infrastructure to power them.