AI may look digital, but its biggest opportunities lie in physical chokepoints…
Editor’s Note: My colleague Eric Fry has spent decades studying how major trends play out and how investors can profit. And he says nearly everyone is looking at AI the wrong way right now.
I completely agree. That’s because, in past tech booms, some of the best performers weren’t the obvious plays. They were the companies supplying what the industry needed to grow.
AI runs on real-world inputs like energy, materials and memory. And in the essay below, Eric shares how these bottlenecks could play a big role in determining which companies move higher from here.
Eric will break this down in more detail during his FutureProof 2026 event tomorrow, March 18, at 1 p.m. Eastern.
If you want to know where the best under-the-radar opportunities may be forming, you can reserve your spot right here.
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Hello, Reader.
Sometimes, the direction of the global economy hinges on a single narrow passage.
A place where critical resources have to squeeze through a surprisingly small opening.
This week, the world got a stark reminder of one of these critical passageways.
At its narrowest point, the Strait of Hormuz is just 20 miles wide.
Yet until very recently, nearly one-fifth of the world’s oil supply flowed through that tiny stretch of the Persian Gulf every day.
As we’re seeing right now, when shipping through the strait slows or stops, the consequences ripple across the entire global economy.
Oil prices spike. Energy markets react. And Wall Street starts paying very close attention.
That’s because when a critical system narrows to a single chokepoint, everything behind it becomes vulnerable.
And right now, something very similar is happening in artificial intelligence.
AI may look like a purely digital revolution. But beneath the software and algorithms lies a physical supply chain — one that’s beginning to strain under explosive demand.
The AI boom depends on enormous quantities of copper, electricity, and memory chips.
And today, all three are facing growing constraints.
In other words, the AI Revolution is running into chokepoints of its own.
In today’s Smart Money, let’s walk you through these emerging bottlenecks, and I’ll show you why they could determine which companies win the next phase of the AI boom.
Because when supply gets tight, the companies controlling those chokepoints often become the most profitable businesses in the system…
AI’s New Chokepoints
As explosive as AI is, it still has boundaries.
Artificial intelligence ultimately runs on physical inputs: raw materials, energy, and memory chips.
Right now, the world doesn’t have enough of any of them.
Let’s start with raw materials.
Demand for data centers, computing power, and electricity is exploding. But the copper, rare earths, magnets, transmission capacity, and material supply chains needed to support that growth are constrained.
To sustain the current pace of AI expansion, we would need to mine as much copper over the next 18 years as humanity has mined in the last 10,000 years combined.
And the market seems to have figured this out.
Since 2025, copper investments have returned more than 100%.
Meanwhile, AI-focused hyperscalers like Amazon.com Inc. (AMZN), Meta Platforms Inc. (META),and Microsoft Corp. (MSFT) have averaged gains of just 1%.
And that’s just the beginning.
The next major bottleneck forming in AI is in energy.
Data centers are filled with expensive chips from companies like Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD).
But those chips must be powered the moment they’re turned on – or their value immediately begins to deteriorate.
In other words, power isn’t just important to AI growth.
It is AI growth.
Demand for power near data centers is already straining local grids. In some areas, electricity now costs up to 267% more than it did five years ago.
Meeting this demand will require an all-hands-on-deck approach – wind, solar, nuclear, natural gas.
The third bottleneck is memory, also known as DRAM…
Nvidia CEO Jensen Huang put it plainly: “The memory bottleneck is severe.”
Without enough DRAM, AI systems simply run out of room to process information.
And the shortage may persist for years.
Nearly 100 gigawatts of new data centers are scheduled to come online over the next four years. But there’s only enough DRAM to support roughly 15 gigawatts over the next two years.
Without memory, artificial intelligence quite literally can’t think.
So these bottlenecks are very real — and they will affect how the AI boom unfolds.
Some companies will struggle because of them.
But others will benefit…
The Companies Controlling AI’s Chokepoints
The companies best positioned to win in this environment aren’t purely digital businesses.
They’re the ones tied to the physical infrastructure behind AI.
Just look at the damage software stocks suffered recently.
Meanwhile, the companies producing AI’s essential building blocks are becoming increasingly valuable.
I’m talking about businesses involved in:
- copper mining
- power infrastructure
- fiber-optic components
- energy generation
- and memory manufacturing
These aren’t flashy companies.
But they produce the tangible materials that keep the AI Revolution running.
And when supply is tight, companies controlling those materials can see their profits soar.
In fact, I’m tracking several companies that sit directly at the center of these shortages — and Wall Street still hasn’t fully priced it in.
That’s what we’ll be talking about at my upcoming event, FutureProof 2026, tomorrow, March 18, at 1 p.m. ET. During this free presentation, I’ll walk through each of these emerging bottlenecks in detail – and reveal the specific companies I believe are best positioned to benefit.
Only a small number of companies will benefit from this phase of the AI story.
Because when an entire system depends on a few narrow chokepoints — whether it’s oil flowing through the Strait of Hormuz or AI running on copper, electricity, and memory — the companies controlling those bottlenecks often become the biggest winners.
So, if you want to understand where the real opportunities may be forming, I encourage you to reserve your seat.
Click here to sign up.
Regards,
Eric Fry
Editor, Smart Money
