The Next AI Data Center Could Be Bolted to Your House

For the last few years, Wall Street has treated the artificial intelligence boom as if it were primarily a semiconductor story.

Nvidia makes the chips; Microsoft, Amazon, Google, Meta, and Oracle buy them…

Then those companies stuff the chips into enormous data centers and sell the resulting computing power to the rest of the world.

It sounds simple enough, except there’s a BIG problem…

The physical world is starting to get in the way.

AI companies can raise more money. Nvidia can manufacture more chips. Software developers can create more applications.

But none of that magically creates more electricity, water, land, transformers, substations, or transmission lines.

And increasingly, those physical constraints are becoming one of the biggest obstacles standing between AI companies and continued growth.

That’s why one of the most interesting developments I’ve seen in AI this year has almost nothing to do with a new chatbot or agent.

It involves a box about the size of an air conditioner that, eventually, could be bolted to every home across America…

AI Has an Infrastructure Problem

I probably don’t need to tell you that the modern AI data center is an industrial monster.

You already know that a large facility requires huge amounts of land, its own electrical infrastructure, enormous quantities of water for cooling, and enough electricity to power a small city.

And you know that Big Tech wants more of them… A lot more.

But money alone can’t solve the problem.

You still need land. You still need grid connections. You still need transformers and substations.

And increasingly, you need communities willing to let you build these enormous facilities in their backyards.

And that’s getting a lot harder…

Data center projects around the country are running into opposition over electricity prices, water consumption, noise, and the strain they place on local infrastructure.

Meanwhile, new grid connections can take decades, and critical electrical equipment can have lead times measured in years rather than months.

Simply put, AI companies can create demand much faster than America can build the infrastructure needed to satisfy it.

And, as the bellwether of the AI trend, Nvidia has a front-row seat to the problem.

Nvidia Is Trying Something Different

If any company truly sits at the center of the AI boom, it’s Nvidia…

Its chips power the world’s most advanced AI systems, and its largest customers include the companies spending hundreds of billions of dollars building giant data centers.

So I pay attention when Nvidia starts exploring another approach and I think you should too…

And earlier this year, Nvidia partnered with San Francisco energy-technology company Span on a radically different kind of AI infrastructure.

Instead of concentrating thousands of processors inside one gigantic building, the idea is to distribute computing equipment across thousands of individual homes.

Think of it almost like rooftop solar…

For decades, electricity generation was concentrated in enormous power plants, but then solar panels began turning individual homes into tiny power producers.

Now something similar could happen to computing.

Instead of building another billion-dollar warehouse filled with servers, portions of AI computing demand could be spread across thousands of much smaller installations.

The research my colleagues recently completed calls these units “Homestacks.”

And the idea behind them is surprisingly simple…

Use the Infrastructure That’s Already There

Most American homes are connected to more electrical capacity than they use at any given moment.

Your air conditioner isn’t always running. Your oven isn’t always baking. And your EV isn’t always charging.

That means electrical capacity already connected to millions of homes regularly sits unused.

And a mini data center could put some of that dormant capacity to work…

Instead of waiting years for a utility to approve a giant new data center connection, the equipment can use infrastructure that’s already there.

The power line already reaches the house. The meter is already installed. The neighborhood has already been built…

And the first units are expected to be installed in new homes across the Southwest in the coming months.

Now, I don’t expect this to suddenly make giant data centers obsolete.

Amazon, Microsoft, Google, Meta, and Oracle are surely going to keep building them.

But the more interesting question is what happens when AI demand grows faster than those giant facilities can be constructed.

Some of that computing demand will have to go somewhere else. And that’s where distributed computing gets so fascinating…

Training AI Is Only Half the Story

Most people associate AI computing with training large language models like ChatGPT.

And training does require enormous concentrations of processing power…

But once an AI model has been trained, it also needs computers every time somebody uses it.

Every chatbot query. Every AI-generated picture. Every virtual assistant request. Every company incorporating AI into its software.

That’s called inference.

And as billions more people and devices begin using AI, inference could become an enormous source of computing demand.

Not every one of those requests necessarily needs to travel halfway across the country to a massive server complex.

Some computing could potentially happen much closer to the user. And that’s exactly what this new architecture is poised to accomplish…

Giant data centers can continue handling the enormous workloads they’re good at.

And thousands of smaller computing nodes can handle other workloads closer to where they’re being generated.

It’s another layer of infrastructure. And building that layer creates an interesting investment opportunity…

Don’t Just Watch the Box

Span, the company at the center of this early rollout, is privately held. So you can’t simply pull up a ticker and buy the stock.

But that’s not necessarily where I’d want to look anyway…

Every one of these mini data centers still needs physical equipment.

It needs rugged housings, electrical controls, energy-management systems, backup power…

And an entire supply chain capable of manufacturing and deploying thousands of units.

And that’s where things get interesting for investors like us…

You see, I’ve always liked picks-and-shovels plays because you don’t need to predict exactly which technology company ultimately wins.

You just invest in the businesses supplying what the entire industry needs.

And some of the publicly traded companies positioned around this emerging distributed-computing market don’t look like obvious AI investments today.

They’re industrial, electrical, and energy businesses.

But if this concept scales, they could suddenly find themselves supplying a brand-new layer of America’s AI infrastructure.

Follow Nvidia’s Lead

It’s far too early to know exactly how large home-based computing will become. But Nvidia’s involvement is difficult to ignore.

This is a company making enormous amounts of money from the traditional data center build-out.

Its biggest customers are spending hundreds of billions of dollars constructing those facilities.

Yet Nvidia is also backing an architecture designed to sidestep some of the biggest constraints those giant facilities face.

That tells me this is at least worth watching.

So, after my colleagues spent months digging through the supply chain behind this distributed data center network…

And they identified three publicly traded companies they believe could benefit if these mini data centers begin scaling…

I knew I had to share it with you before word got out to the rank-and-file investors.

One supplies a critical piece of physical infrastructure. Another provides technology needed to manage power inside the home…

And the third offers a way to potentially profit from the massive electricity demands AI is creating whether distributed computing takes off quickly or not.

But I’m not going to give you the three names here. That’s what the research is for.

And they’ve put the complete story together in a new report called “The Homestack Portfolio: Three Little-Known Stocks Built for the Mini Data Center Boom.”

If you want to see exactly what Nvidia is backing, how this new distributed AI network is supposed to work, and the three public companies positioned behind it…

You can see the full presentation and get the report right here.

And I highly recommend you do, because the next big AI opportunity might not be another chipmaker…

It might be hiding on the side of your neighbor’s house.