Carrier (A/C units) are Falling With Nvidia

Happy Sunday.

Carrier makes air conditioners. On Thursday it sold off with Nvidia.

Johnson Controls, which also sells cooling, went down with it, and so did the companies that sell generators, turbines and electrical gear: Caterpillar, Cummins, GE Vernova and Eaton. The same day the Nasdaq fell 5.5 percent, its worst day in 19 months. Nvidia lost more than 9 percent, AMD about 17 and CoreWeave 12, which leaves CoreWeave 77 percent below its June 2025 high. You saw the chip stocks, but read the rest of that list again and you’ll notice it’s everything it takes to put up a data center, down to the AC.

Two days earlier, voters went against data centers in 40 of 41 local ballot measures, by CNBC’s count. Texas, Ohio and Georgia also elected Democratic governors, and the Texas winner, Gina Hinojosa, ran on a data center moratorium unless builders use union labor and guarantee power and water prices. Data centers mattered in the bigger races too, since more than half of voters told NBC’s exit poll they were a “crucial” or “major factor” in how they voted for Congress.

I think voters were pricing something narrower than the AI backlash the coverage described, which is their electric bill. On Thursday the market followed them, because AI is starting to look a lot like aluminum. Its price falls every year, it’s made mostly out of electricity, and now the electricity needs the neighbors’ sign-off. (Stay with me.)

When a product turns into a power bill, the money tends to drift away from whoever makes the best version and toward whoever holds the power. That goes a long way toward explaining how Anthropic’s IPO talk fell from $2 trillion to as low as $1.1 trillion in about a month. It’s also why Elon Musk is right that AI is running into a wall on power and wrong about who built it.

The ballot question was the electric bill

Thirteen states and Washington, D.C. sit on one grid called PJM. PJM pays power plants to stay ready for the hottest days of the year, and households cover that fee in their bills. For 2024-25 it cleared at $28.92 per megawatt-day. For 2026-27 it hit the $329.17 cap. PJM's independent market monitor found data centers caused 63 percent of the 2025-26 jump, about $9.3 billion that ratepayers paid. In Ohio, one of the three states that just flipped governors, that charge alone adds roughly $16 a month to the average household bill, per IEEFA.

Read Hinojosa's platform again with that number in mind. Asking builders to guarantee power prices is a utility rate case with a yard sign on it. Matt Rowe at Man Group gave the market's version after the vote. These projects, he said, "are going to take longer to get executed, and they're going to cost more to do."

Musk called the wall early

In early 2024, at a Bosch conference, Musk said the chip shortage was ending and electricity was next. "I think next year, you'll see they just can't find enough electricity to run all the chips." He was a year or so early, but the direction held up.

In a recent interview with The Economist he made it sharper. Outside China, he said, "the rate at which AI chips are being made exceeds the rate at which new electricity is coming online."

You can see it on the ground. Oracle has been trucking in compressed natural gas for more than a year to keep its Salt Lake City data center running, because the pipeline and the grid hookup are late, per Bloomberg. Microsoft walked away from an Nscale site in England it had planned to use, and its UK chief told CNBC the reason was Nscale's ability to get electricity.

Where I part ways with Musk is on who built the wall. He treats power as an engineering problem, so his answer is engineering: put the data centers in space. Two weeks ago I wrote about the risk that nobody directs traffic in orbit. After Tuesday that same gap sounds like the sales pitch, because orbit is the one place no county board gets a vote. Voters and regulators built the wall America hit this week, out of a permit, a rate case and a ballot.

Aluminum went through this first

On December 6, 1884, workers set a 100-ounce aluminum pyramid on top of the Washington Monument. Aluminum cost $1.10 an ounce that year, about the same as silver, according to the National Park Service.

On February 23, 1886, a 22-year-old Oberlin graduate named Charles Martin Hall worked out how to pull aluminum from its ore with electricity. Paul Héroult found the same method in France that year. In 1888 Hall co-founded the company that became Alcoa , and his process is still how aluminum gets made.

From then on the chemistry was solved, and aluminum's price mostly came down to the cost of power. A ton takes about 15 megawatt-hours of electricity, per ING, and power is close to 40 percent of the cost of making it, per the Aluminum Association. The metal trades at one global price, so a smelter can't charge more for being good at it, and the power bill decides which smelters survive.

Look at what smelters went through whenever power got tight. During the Western power crisis in 2001, Alcoa idled its Intalco smelter in Washington state and sold the electricity it had under contract back to the Bonneville Power Administration, because the power was worth more than the metal. In a January 2019 heat wave, Australia's grid operator cut Alcoa's Portland smelter off for two hours with no notice, and Alcoa said it wouldn't be compensated. When European power prices quadrupled in 2022, the continent lost about half its aluminum and zinc smelting capacity within a year. A trader told Argus Media as that run started, "Any smelter with exposure to spot energy is dead."

Today’s Sponsor

10 Stocks at the Center of AI’s $1 Trillion Boom

AI’s growth story is much bigger than chatbots.

The market was already valued at an estimated $800 billion by late 2025, and continued adoption could push it beyond $1 trillion in the years ahead. That growth will require more data centers, computing power, software, networking and intelligent devices.

But the most obvious AI names may not be the only companies positioned to benefit.

MarketBeat’s free 10 Best AI Stocks to Own in 2026 report identifies ten publicly traded companies helping power the next phase of the AI buildout. Some are established leaders. Others occupy less obvious corners of the expanding AI ecosystem.

This free report names 10 stocks positioned to ride that wave before the rest of the market catches on.

AI just signed the smelter's contract

A smelter's power deal makes you pay for your own hookup and agree to be cut off first. OpenAI just accepted both terms.

Georgia regulators approved its Georgia Power deal in August. It covers about 3.2 gigawatts of new demand, OpenAI pays the full cost of the infrastructure to serve it, and up to 1 gigawatt can be shut off when the grid is stressed. This week OpenAI tied that 1 gigawatt to its planned Effingham County campus and said flexible electricity demand will be central to every campus it builds next. Its head of energy policy, John McCarrick, said a year ago a big hyperscaler was still defending 99.999 percent uptime, the promise that a data center never goes dark. He doesn't think anyone defends it now.

So the most reliable building in America just agreed to pay for its own wires and be among the first things switched off in a heat wave. Alcoa has been signing that contract for years.

The product is following the aluminum path too. Ramp tracks spending at more than 80,000 businesses, and by its count blended token prices (what companies pay per unit of AI output) are down 41 percent from the peak, to $0.68 per million tokens. Token spending hasn't grown in two months, and frontier models fell from 53 percent of volume to 45. Goldman Sachs CEO David Solomon said in Hong Kong before the election that there are "a lot of things where we don't need the frontier."

That's 1886 for intelligence. The good-enough version gets cheap, and the thing it's made from gets scarce.

Anthropic's IPO is pricing a smelter

Anthropic's amended S-1 reads like a smelter's income statement with a much better product. Third-quarter revenue rose about 47 percent from the second quarter, to $16.96 billion, roughly 12 times a year earlier. The operating line went the other way, from a $974 million profit in the second quarter to a $567 million loss in the third.

Committed spending jumped from $265 billion to $895.4 billion, "substantially all of which is related to compute and infrastructure," running out to 2045. That's about seven times its $131.8 billion of cash. So revenue rose by nearly half and the profit still flipped to a loss, which is what you'd expect when the price of the output is falling and the biggest input is locked up for 20 years.

The price talk moved with it. Investors floated $2 trillion in early October and $1.4 trillion to $1.5 trillion late in the month. Now Bloomberg says talks center on $1.2 trillion to $1.3 trillion, with some buyers as low as $1.1 trillion. The last private round, in May, was $965 billion. The roadshow can start as early as Tuesday, and Anthropic wants to price before Thanksgiving under the ticker ANT.

I read that slide as the market working out how much of Anthropic is a software company and how much is a business that turns electricity into a product. The $2 trillion talk priced it as all software.

OpenAI got its number a different way. Bloomberg says it's now valued at $1.25 trillion after raising $11 billion, against a $30 billion target at a hoped-for $1.4 trillion. In March it was $852 billion. That mark went up because the people writing the checks agreed to it. Anthropic's gets set by everyone, in the month the Nasdaq lost $2.5 trillion in a day. Sam Altman has said OpenAI will hold off on its own IPO. (I'd hold off too.)

The best argument against me is demand. Palantir's revenue rose 96 percent last quarter, and Anthropic grew twelvefold in a year, which no smelter ever did. Solomon also said demand for compute still far exceeds supply. I'll grant all of that and make a narrower claim. If electricity is the limit, revenue can only grow as fast as the hookups, and each new hookup costs more than the last.

The money moves to whoever owns a hookup

When power is the limit, the scarce asset is the hookup, and most of the good ones already have owners.

Microsoft is acting like it knows this. It's shrinking its list of neocloud partners (the companies that rent out Nvidia chips) to favor its own buildings, according to people who spoke to CNBC. Besides walking from the Nscale site in England, it declined to renew Nscale in Texas and passed on renewing a deal with Oracle. It just stretched the estimated useful life of its data centers from 15 years to 25, and Bloomberg reports a plan to grow from about 12 gigawatts to more than 38 by 2032.

The renters look like the smelters on spot power. Nscale shows $103.4 billion of contracted value against $2.6 billion of live capacity, about 2.5 percent, per Benchmarkit's Ray Rike. Buyers of CoreWeave's plain bonds now want 15 to 16 percent. Tenants waiting on late data centers are charging $1 million to $5 million a day in late fees, which is about the going rate for a missing megawatt.

As Alcoa found at Intalco, in a power crunch the signed contract for electricity is worth more than the plant that burns it. The same logic explains why the gear makers got sold Thursday. If voters slow new projects, fewer turbines get ordered, and the hookups already running are worth more.

The tells before Thanksgiving

Usual reminder, I'm not a financial advisor and none of this is advice.

CoreWeave and Nebius report next week. IREN co-CEO Daniel Roberts said on his own call that the questions have moved "from how big the contract is to whether it can be delivered, financed, and run at a profit." Skip the backlog headline and look for energized megawatts and delivery dates. If dates slide and power is the reason, Musk's wall is in the numbers.

Nvidia reports November 17, after guiding to about $108 billion of revenue at a 74 percent gross margin. A beat tells you chips are still being made and sold. It doesn't tell you they're turned on, so listen for customers talking about sites instead of supply.

Then there's Anthropic's price. At or above the $965 billion May round, the market is still paying for the brain. Well below it, the market is pricing the smelter.

The aluminum pyramid is still on top of the Washington Monument. In 1884 the metal was precious enough to belong there. Two years later a kid from Oberlin figured out how to make it cheap with electricity, and the money in aluminum has followed the power ever since.

Musk told The Economist that money won't matter in 2036. Maybe so. On Tuesday the electric bill mattered, and it went 40 for 41.

Stay curious 😎

John

Today’s Sponsor

Your buyer asked ChatGPT. It named your competitors.

Search didn't die. It moved. 

Your buyers ask ChatGPT, Gemini, Claude and Perplexity what to buy, and act on the answer. If you're not in it, a competitor is. 

ChatFeatured does the work to get you cited. Most customers see their first citations inside 7 days.

Start your free 7-day trial