Disclaimer: This article is in no way financial advice, nor solicitation to buy or sell shares in this company. It is purely for educational purposes only. You are highly recommended to conduct all necessary due diligence and make your own informed decisions before making any financial decisions. The writer owns shares in some of these companies and may at any point in time increase or reduce their position without prior notice. Do not try to copy trade!

Preamble

Ironically, big tech is spending billions on AI infrastructure even as intelligence becomes cheap and commoditized. This paradoxically boosts the value of "non-intelligent" hard assets like energy, mining, agriculture, and logistics.

As Guan notes, AI CAPEX is a Prisoner’s Dilemma: tech giants must spend to stay relevant. Ultimately, this capital isn't vanishing—it's driving massive real-world demand for physical resources including construction, property (land), concrete, steel, mining, electricity, water.

This article will focus on the Oil & Gas (O&G) industry only.

Negative Narratives on O&G Creates Opportunities

The O&G industry has always given me mixed feelings. First of all, many companies in this sector meet the criteria of being a target for value investment:

1. Low valuations;

2. Strong cash flows; and

3. High barrier of entry.

But at the same time, the narrative and trend for oil, over the long term, was always for demand to decrease over time as alternative sources of energy and the push for more “green” energy became stronger.

In the recent decade, the O&G industry has often been referred to as “sunset”.

The only time anyone became interested in the sector is when news of “war” or “geopolitical tensions” start appearing, often as a speculative knee jerk reaction rather than a more meaningful change of trend.

This article will not speculate how likely a war could break out, but rather, the focus will be from the perspective of a secular trend in global energy demand and security. I will also touch on why, with all the pessimism priced in and lack of interest in the sector, this could provide us with a good margin of safety to position into the backbone of global economic activity.

As with all commodities, (such as palm oil which I covered in depth here: https://www.doitduit.com/p/why-invest-in-the-plantations-of-malaysia-a-formerly-highly-sought-after-sector-now-shunned-by-every ), we need to look at supply-demand dynamics to get a better understanding.

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