Sometimes I like to take a step back and think about the basics & the hard rock solid reality around us.

While AI is the new big thing that promises radical changes & returns over the next years, there are some very traditional industries already winning from AI. Construction, for instance, is generating cash as we speak. And it all happens in silence.

For context - to build AI, you need more than raw materials and resources. You need data, compute, algorithms, energy and people (to set up everything). Well compute, energy and people are all dependent on some of the most basic / traditional businesses around - metal & energy producers, transporters, manufacturers and real estate developers. If we don’t have these, we can forget about how AI will change our lives further.

To secure compute, all big tech companies are investing heavily in data centers. Microsoft, Google, Amazon and many other other data center providers are.

US is tracking construction spend data by construction segment. Since 2014, data center construction spend increased 17x, while in the past 4 years, it increased 3x. See below:

And it seems like the trend is keeping up. Last year the spend increased +60%, being the fastest growing construction spend.

However, it is important to point out that data center construction accounts for less than 2% of the total construction spend, so about $28.5Bn as of Aug. 2024 (here’s the source data to play around) in US alone. Globally, it’s at least twice more.

Putting things into perspective - it is a drop in the ocean for the large construction industry though. And looking at the outlook of AI - which promises hundreds of Billions or Trillions of $ in annual spend, paying a few tens of Billions for construction does not sound that bad (even though construction is one of the many costs of AI).

But the point I am making is that AI is still a promise today - it is mostly burning money, while construction is making money quietly (as I don’t really know unprofitable construction companies).

So, while AI's potential is still being realized, there’s many traditional industries, like construction, that are quietly making money today - without the flash, but with steady, real-world gains (and of course, not as fancy, right?). Perhaps, in the rush to chase the next big thing, we shouldn't overlook the industries quietly building the future around us.