Kevin O’Leary has issued a sharp reality check for investors banking on the artificial intelligence (AI) boom, warning that the United States is critically unprepared to power the technology it pioneered.

500 Gigawatt Gap

In a direct-to-camera statement, the O'Leary Ventures chairman argued that while AI productivity is currently propping up the S&P 500, the U.S. energy grid is dangerously stagnant compared to China's aggressive expansion.

O’Leary identified the physical power grid as the single biggest threat to American AI dominance. While AI tools have driven market optimism across all 11 sectors over the last 24 months, O’Leary cautioned that this growth is hitting a hard physical ceiling: electricity.

“Here’s our problem… We have no power,” O’Leary stated bluntly. He drew a stark contrast between the two global superpowers, noting that China has added “500 gigawatts [of power] in the last 24 months,” while claiming the U.S. has built “zero.”

“We have no power on the grid. This is a big problem,” he added, signaling that without massive infrastructure upgrades, the U.S. cannot sustain the energy-hungry data centers required for the next phase of AI.

Inflationary Tariffs

Beyond the grid, “Mr. Wonderful” offered a bearish outlook on immediate economic relief. Despite political pressure—or “jawboning”—aimed at the Federal Reserve, O’Leary stated investors should not count on rate cuts while Jerome Powell remains Chair.

He also attacked current tariff policies, labeling them a direct cause of the affordability crisis.

“Tariffs themselves on commodities or goods that you don’t create yourself is inflationary. There’s no way around it,” he explained, urging policymakers to remove these levies to lower costs for consumers.

Market Reality Check

Ultimately, O'Leary sees the S&P 500's record highs as a product of AI-driven productivity rather than a healthy macro-economy.

While acknowledging the effectiveness of these tools, his message remains clear: productivity software is useless without the hardware—and the wattage—to run it.

The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed lower on Tuesday. The SPY was down 0.20% at $693.77, while the QQQ declined 0.15% to $626.24, according to Benzinga Pro data.

Here is a list of energy-linked ETFs for investors to consider amid the power bottlenecks to fuel the AI boom.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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