Artificial Intelligence (AI) is the ability of a digital computer or a computer-controlled robot to perform tasks commonly associated with intelligent beings such as learning, problem solving, reasoning, and decision making. AI, and the data centers required, demand more of one thing… Energy. Energy is essential to addressing the challenges of reducing costs on everything from groceries to housing. History proves that economic progress only comes when energy production increases. Long story short, energy fuels the growth that improves people’s lives. AI requires significant computational power primarily due to the complex algorithms and large datasets involved in training and deploying machine learning models. Many AI applications utilize deep learning, which involves networks with multiple layers. Training these networks requires extensive computations, which require large amounts of data for training to improve accuracy and performance. This data must be processed, stored, and analyzed at data centers, consuming a significant amount of computational resources. The more robust the AI workload, the more energy is consumed by the data center. As AI continues to evolve, further advancements in data centers will be necessary to keep pace with its requirements. By 2030, data centers could potentially consume the equivalent energy of New York City's annual energy use. Approximately 60% of that usage would be powered by gas. According to S&P Global, this shift could add 50 GW of gas-fired power to US grids, and increase the natural gas demand by 17%. According to McKinsey & Company, global demand for data center capacity could rise at an annual rate of between 19 and 22 percent from 2023 to 2030 to reach an annual demand of 171 to 219 gigawatts (GW). This contrasts with the current demand of 60 GW, raising the potential for a significant supply deficit. To avoid a deficit, at least twice the data center capacity built since 2000 would have to be built in less than a quarter of the time. Access to power has become a critical factor in driving new data center builds. Without ample investments in data centers and power infrastructure, the potential of AI will not be fully realized. Meeting this demand will require considerably more electricity than is currently produced in the United States. Below are some suggestions to create new solutions to power access and sources. 1 . Investors can funnel investments into utility companies to build out transmission and distribution (T&D) infrastructure in key markets. The demand for data centers and power show no signs of slowing, so T&D markets should respond accordingly. 2. The timeline of building out data centers and those of power infrastructure development can take years. Hyperscalers are building out capacity in new and atypical locations outside the core data center markets because these areas offer cheaper, available power and have the potential for carbon-free infrastructure . Investors have opportunities to fuel growth by accelerating the build-out of fiber or power infrastructure in these secondary locations. 3. Investors can seek to support behind-the-meter solutions to provide power in areas where utilities providers cannot keep up with pace or reliability requirements as local supply availability or transmission constraints worsen. The sites available for these opportunities are limited, but creating more competition and urgency among investors to act sooner than later can help secure the talent, connectivity, and regulatory requirements necessary to run the sites. 4. Investment in clean energy such as solar power or offshore wind. Investment in this space has a long track record, but does have mixed returns. AI has forced the pace of progress. Whether we can provide the energy to keep up with that pace is something only time will tell. Tickers to consider: KALA , EVAX , JTAI , AEON Sylva Disclaimer: https://www.sylvacap.com/disclaimer

DeepSeek is an AI development firm based in Hangzhou, China. DeepSeek focuses on developing open source Large Language Models (LLM). A large language model is a type of artificial intelligence algorithm that applies neural network techniques with lots of parameters to process and understand human languages or text using self-supervised learning techniques . The company's first model was released in November 2023. The company has repeated multiple times on its core LLM and has built out several different variations. On Jan. 20, 2025, DeepSeek released its R1 LLM at a fraction of the cost that other vendors incurred in their own developments. DeepSeek is also providing its R1 models under an open source license, making it free to use. Deep Seek’s R1 LLM will also have far-reaching impacts for the energy sector. Not only is DeepSeek far cheaper than its rivals, it also claims to be far more energy efficient. This is an important declaration, as data center energy demand growth has recently been pushed to extreme heights thanks to the enormous spread of AI. The scale of these newfound energy needs are so significant that it has single-handedly destroyed the tech sector’s hopes of meeting its own decarbonization goals, placed stress on energy grids around the world, and threatened the energy security of entire nations. The scale of the challenge posed by data center demand poses a serious money-making opportunity for energy providers. “Energy firms ranging from small reactor startups to incumbent utilities to gas producers — and plenty in between — see data centers as a critical U.S. market,” One segment of the energy industry that could potentially benefit from the expected data center boom is nuclear power. Older power plants have been closing across the country for the past decade. Yet, atomic power has seen a surge in interest and investments in the last year, as owners revive shuttered plants and tech companies seek contracts for the electricity. Nikki Hsu, Analyst for Bloomberg Intelligence Utilities, said that power demand is going to climb from homes and factories that are increasingly shifting to electricity. “Demand is definitely going to rise, but by how much, we don’t know,” she said. “Nobody knows exactly what AI demand will be.” Rob Thummel, Senior portfolio manager at Tortoise Capital, asserts that AI will boost natural gas. He alluded that natural gas could steal some of growth from nuclear power developers, since reactors typically take longer to build and are far more expensive than gas plants. “We still think natural gas will be a winner here, primarily because it is the lowest cost from a reliability perspective,” Thummel said. DeepSeek’s efficiency could even lead to more widespread use of AI. According to Carlos Torres Diaz, head of power markets research for Rystad Energy, “if data centers become more efficient, they may end up simply processing more data — making it difficult to model their future energy use.” It is important to remember that if you download Deep Seek, then all of your data will be sent back to China. However, since Deep Seek open sourced its R1 LLM , then it is available to everyone. Venture capitalist and newly appointed AI and crypto czar for the White House, David Sacks, stated in an interview with Fox Business that Perplexity and Ollama are two American hosted companies that will allow you to have access to Deep Seek without sending all your data back to China. Tickers to consider: KALA , EVAX , JTAI , AEON Sylva Disclaimer: https://www.sylvacap.com/disclaimer

On January 20,2025, this country will inaugurate a new and previous President. This inauguration represents a change in political power in the Executive Branch. How much impact will this transition of power affect the Stock Market? Historically, the U.S. Stock Market tends to struggle a short time after inauguration day. Since the DOW Jones was created in 1896, one of its worst quarterly returns has been the first three months of a President’s term in office , producing an average return of 0.2%. This compares to an average return of 1.9% in the other quarters of the Presidential term. This pattern has been consistent whether or not the incumbent political party won or lost. In Donald Trump’s first presidency, the S&P 500 performed very well. Specifically, the S&P advanced 70% during Trump’s first term, this equates to 14.1% annually. Some analysts are anticipating strong returns in his second term driven by deregulation and tax cuts. In fact, since the creation of the S&P 500 in 1957, the index performed better under President Trump than any other president except Bill Clinton. It is important to remember that presidents do not control the stock market. However, they can influence it by shaping policies that impact the economy. As Trump prepares to be sworn in as the 47th president of the United States, he is set to inherit a strong economy, characterized by robust growth opportunities, low unemployment, and positive financial markets. The agenda of a second Trump administration could have a stimulating effect on the U.S. economy in 2025 and into 2026. Many experts making stock market forecasts for 2025 are convinced that stocks should enjoy not only a rally, but broad-based prosperity. Sameer Samana, a global market strategist at Wells Fargo Investment Institute, noted the importance of the Republicans capturing not only the White House, but the Senate and House of Representatives as well. According to Samana, this red sweep means “more cohesion,” supporting a strong stock market forecast for the coming year. Tickers to consider: IKT , KALA , EVAX , JTAI Sylva Disclaimer: https://www.sylvacap.com/disclaimer

The November election gave the Republicans control of two of the three branches of government. Former President Donald Trump’s victory over Vice President Kamala Harris gave the Republicans control of the Executive Branch and by winning a majority in both the House of Representatives and the Senate, they now have control over the Legislative Branch as well. What will this “Red Sweep” mean for the economy? With former President Donald Trump regaining control of the White House and having majority support in both the House and the Senate, it is more than likely that President Elect Trump’s economic campaign promises will come to fruition. Trump has proposed increasing Federal revenue by imposing tariffs on goods made in foreign countries. He plans on imposing a 60% tariff on all goods made in China and a 10-20% tariff on all goods made in other countries. While some feel that this will hurt US competitiveness, others believe it will encourage the US to manufacture its own goods on our own soil. Leading to another Trump incentive, his proposal to lower the Corporate Tax rate from 21% to 15% for any companies producing goods in the US. Trump has also pledged to renew most of the provisions of the 2017 Tax Cut Job Act (TCJA) , which is set to expire in 2025. He plans on making these provisions permanent, including a higher level for personal standard deductions and lower taxes in most brackets. Trump has proposed several new targeted tax breaks, including an exemption on taxes on both overtime and tipped income. The former president has also proposed excluding Social Security payments from income taxes. He has also proposed expanding the Child Tax Credit from $2000 to $5000.00. President-elect Trump has argued for broad deregulation, which has been supported by the Supreme Court’s decision to repeal the Chevron Doctrine . By overturning Chevron the powers of regulatory agencies have become extremely limited if not potentially non-existent. Big Tech may see mixed impacts from de-regulatory policies, and energy companies stand to benefit most from looser regulations. Additionally, the perception of less anti-trust enforcement could boost corporate Mergers and Acquisitions (M&A) moving forward. In response to the election, Equity markets have rallied strongly, the Treasury yields and the U.S. dollar have surged. Greater policy change under a “sweep” could affect economic growth, inflation and market performance. Time will tell in the months to come how much an effect this sweep will have. Tickers to consider: IKT , KALA , EVAX , JTAI Sylva Disclaimer: https://www.sylvacap.com/disclaimer

The United States will elect a new President on November 5, 2024. This is set to be one of the most important economic and political events in recent history. The outcome of this election will have a major impact on the US economy, and will determine the direction that the US will be traveling toward for the future. The trajectory of the US economy looks very different under each candidate. What will a Trump victory mean for the economy? Former President Trump has made a series of promises to help revitalize the US economy. These promises include changes in the trade policies, eliminating taxes on tips and Social Security benefits, and a proposal to reduce the corporate tax rate. President Trump is confident that these measures will help in restoring employment opportunities, and also cool down inflation. Trump plans to impose a universal tariff of 10%-20% on all imports and as high as 60% on goods from China. He emphasizes that imposing tariffs will protect jobs of Americans and industry workers as this will encourage domestic production and reduce reliance on foreign goods. Trump believes that the tariffs would be absorbed by foreign producers; therefore the rising costs would not affect Americans. Trump also plans to bring back all of the tax cuts that he signed in 2017, and further reduce taxes for individuals and corporations. His proposal includes elimination of taxes on Social Security benefits and also tips. Trump also believes that lowering the corporate tax rate from 21% to 15% would produce more jobs and spur economic growth. Trump also supports strengthening our borders and a mass deportation for undocumented immigrants. This would increase jobs for documented immigrants or Americans, and decrease the country’s financial burden for providing for undocumented immigrants. Undocumented immigrants consume the benefits of living in the United States (healthcare, education, etc.), but do not contribute fiscally (through taxes) for the services that they use. How will the economy be affected if Harris wins the election? Vice President Kamala Harris has been in office for the past four years. During her time in office, inflation has been out of control. The cost of living has significantly increased since Harris has been VP. Over the past four years, grocery prices have increased by 22%, utilities have increased by 28% and the price of new homes have increased by 28%. In a speech she gave in Washington this past week, the Vice President focused on the challenges facing Americans, including high prices for food, housing and childcare. She stated, “I get it.” What she failed to address is that these price increases occurred on “The Biden Watch,” which technically implies “her watch.” Vice President Harris has indicated that she would like to see the corporate tax rate return to 35%. This would mean continued higher costs for corporations and small businesses that are categorized as a corporation (Limited Liability Corporations, S- Corps, and C-Corps). This high tax rate would cause the owners of said companies (whether large or small) to pass their costs onto their consumers. This would probably result in the companies charging more for goods and services that they provide. Ultimately keep prices higher for the average consumer. The Vice President has also promised to keep a Biden promise that those earning less than $400,000.00/ year would be spared any higher taxes. However, she does have a record of favoring steeper taxes, not only for businesses, but also for individuals. She would have to find the money to pay for the expanded social programs that she is focusing on, such as affordable housing , paid leave, and childcare support. It is highly likely that the money for those programs will have to come from tax increases, unless she knows of some buried treasure somewhere. The Vice President has not addressed her thoughts on tariffs. So it is uncertain how she will proceed regarding trade tariffs. Harris does support Biden’s commitment to renewable energy. However, renewable energy investments require more upfront costs. Again, it is unclear where that money will come from. With regards to high grocery prices, Harris has proposed a plan for a federal ban on grocery price gouging during national emergencies . This may help to manage food costs during a time of crisis, but will probably have little impact on prices outside of emergencies. Harris supports current immigration laws and does not support mass deportations. She has signaled support for enhanced border security, but fails to have policies that will strengthen the border. Trump’s policies are very aggressive and bold. While his policies may not be palatable with everyone, he believes that his policies prioritize American industry and independence. Kamala Harris, in turn, is coming from a more passive role as vice president. She plans to build on Biden-era policies with a focus on sustainability and middle-class support. Yet, Harris has still not proposed any tangible actions on her plans, leaving many economists concerned about the viability of her plans. Tickers to consider: IKT, KALA, EVAX Sylva Disclaimer: https://www.sylvacap.com/disclaimer