Data centers in space will be 'front and center' for investors in next 12-24 months: BofA's Obin

Kelly Evans (Anchor) 00:00.230

joining us now is andrew obin equity research analyst at B of A who covers the industrial space welcome

Andrew Obin (Equity Research Analyst) 00:05.230

thanks so much

Kelly Evans (Anchor) 00:06.110

when you hear data centers in space does it make you laugh shake your head or go yeah this is actually what's coming and we're starting to think about the build out for this

Andrew Obin (Equity Research Analyst) 00:14.390

already well the first i thought it was bunkers yeah and then when you dig in you actually realize that there are very specific developments that are driving the narrative and we think it's going to be a front and center for investors over the next twelve to twenty four months

Andrew Obin (Equity Research Analyst) 00:27.630

and that's why we wrote the report that we did what

Kelly Evans (Anchor) 00:30.070

are the developments that make this not the science fiction narrative but a real possibility

Andrew Obin (Equity Research Analyst) 00:34.870

yeah other thing may still be a science fiction narrative right but let's step back so the real constraint of the world we're running out of electricity and you know our point is that even without the AI because of electrification the US was not going to have enough capacity to

Andrew Obin (Equity Research Analyst) 00:52.870

meet the demand right so right now if you want to build a data center you have to get online you have to get your grid connection on top of the regulators now want you to do things to the data center because data center is incredibly disruptive to the grid so you know why are

Andrew Obin (Equity Research Analyst) 01:11.070

people thinking about space space is cold

Kelly Evans (Anchor) 01:14.150

there's no NIMBY issues

Andrew Obin (Equity Research Analyst) 01:16.230

well that's exactly right there is it's much less regulation right so you you escape regulation there's plenty of sunshine you can generate eight to ten times the energy from sun that you can on earth and it's cold right so you don't have to worry about cooling so why all of a

Andrew Obin (Equity Research Analyst) 01:34.070

sudden there are these headlines so the magic number the way the math works is that operating data centers not just electricity availability it's also expensive so forty percent of operating costs of a data center is electricity

Kelly Evans (Anchor) 01:47.110

wow

Andrew Obin (Equity Research Analyst) 01:47.870

and what's happening at the magic number if you can launch things at space at two hundred dollars per kilo all of a sudden the math starts working that the cost of launch equals the value of all the electricity that you're going to

Kelly Evans (Anchor) 02:04.470

consume is this purely hypothetical or are there people who have kind of proven capability to go and do this

Andrew Obin (Equity Research Analyst) 02:10.990

well so this is where it gets interesting so a you know if you look at the developments so there is a project there's star cloud project it was launched in october and nvidia talked about it now this is one GPU launched in space you know i think it's like one KW a

Kelly Evans (Anchor) 02:29.390

small step for man it's

Andrew Obin (Equity Research Analyst) 02:30.630

it's it's it's it's a very small step more important step there was also a song catcher paper out of google so that got a lot of people's attention but the most important thing is that it's what's taking place at spacex right and you have starship block three that's going to

Andrew Obin (Equity Research Analyst) 02:46.430

become operational next year and that actually is supposed to get you on this path of getting to two hundred per kilo by then of the decade right and in fact musk is also talking about starlink V three having this AI capability so all of a sudden it went from well on science

Andrew Obin (Equity Research Analyst) 03:03.710

fiction and by the way people were talking about since nineteen forties

Kelly Evans (Anchor) 03:06.630

right there at least like two steps ahead it's it's fascinating to watch how these this could all tell me who which other companies obviously might have a spacex IPO next year this will be a big narrative in that who else in your coverage space if i said i just want to get

Kelly Evans (Anchor) 03:18.630

invested in this now to potentially benefit from from any upside here

Andrew Obin (Equity Research Analyst) 03:23.190

look so we we have a different analyst who covers that entire complex but for us the reason we wrote the report because we actually started to get inbound calls it was more like who's going to get out of business who's going to get driven out of business because of that right

Kelly Evans (Anchor) 03:36.430

is it time to abandon all the data center

Andrew Obin (Equity Research Analyst) 03:38.150

that's exactly right do you need electricity do you need power so our takeaway is that there's still plenty to do on planet earth right i'm

Kelly Evans (Anchor) 03:46.510

reassuring right and

Andrew Obin (Equity Research Analyst) 03:48.230

you know there is a timeline and i think realistic was spoken some CEO 's and our coverage and people think it's more twenty thirty five twenty forty where it becomes at scale so the most interesting thing that we so we looked at it as a threat to the existing infrastructure but

Andrew Obin (Equity Research Analyst) 04:03.110

the reality if you look at actually if you look at the star cloud project right still has CD use you still need to cool the chips you still need to process the electricity heard that yeah and what's also interesting on top of it you have to dump this heat into space which is

Andrew Obin (Equity Research Analyst) 04:19.990

actually becomes a very sophisticated engineering problem because

Kelly Evans (Anchor) 04:24.790

it's vacuum they're playing the music like we don't want to hear about dumping the heat and space andrew this is supposed to solve all of our problems in all seriousness it's a great report thank you thank you for joining us so much