Silicon Valley Has Lost Its Biggest Advantage
This article argues that the AI boom has shifted the tech industry's focus from software to physical infrastructure, such as data centers and power generation. It highlights how companies like Caterpillar are benefiting from the massive demand for energy and construction materials required to support AI development.
Why it matters
It highlights the hidden physical and economic costs of the AI revolution, suggesting that the 'tech' advantage is increasingly tied to industrial capacity.
In the data-center age, the business of tech companies is more like oil-refining than coding.
Illustration by The Atlantic. Source: Andrew Merry / Getty. July 18, 2026, 7:30 AM ET Share Save The AI boom has showered some of the nation’s most prominent companies in market value. OpenAI and Anthropic are now the two most valuable private companies in the world. Google, Microsoft, and Nvidia have become larger than ever. But among the biggest winners has been Caterpillar, a purveyor of yellow trucks and cranes. Caterpillar’s stock has more than doubled in value over the past year, making the company worth six times as much as Nike. Its ascent has little to do with the construction vehicles (both real and toy) that it is known for. Instead, Caterpillar’s success comes from its giant gas-powered engines that are helping power the nation’s data-center build-out.
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