The $215 Billion Datacenter Boom

In an X post this week, ZeroHedge reshared a piece from last year about companies involved in the buildout of datacenters to support the surge in AI. 

Behind The $215 Billion Data Center Boom: Here's Who Makes All The Key Componentshttps://t.co/CJ0HUeQlDG pic.twitter.com/joRpNo6HFI

— zerohedge (@zerohedge) September 21, 2024

In the graphic included in the X post above, you can see chillers mentioned as a datacenter component. 

New Cash, New Options, Same Thesis

In a post earlier this month (“Finding Alpha on X”) I mentioned why Tecogen’s (TGEN -1.95%↓) gas‑engine chillers could become a surprise beneficiary of the AI datacenter build‑out.

Since then two meaningful updates have landed:

1. Capital Raise @ $5.00

• 3.5 million shares (plus full 485 k over‑allotment) sold on 18 July at $5.00.

• ≈ $19.9 million gross proceeds closed 21 July.

• Management earmarked use of funds for working capital, product development, and — explicitly — expansion into the data‑center market.

Bottom line: the raise extends runway well into 2026, easing “going‑concern” fears for potential customers who need multiyear service support.

2. Options Finally Listed

As of last Friday TGEN has a chain out to January 2026. Liquidity is thin but workable, which lets us monetize patience instead of chasing spot.

Quick Thesis Refresher

• AI’s heat dilemma: GPU racks now swallow 50‑70 kW; electric chillers compete for the same power budget.

• Gas‑engine chillers (Distributed Thermal Exchange): Off‑grid cooling plus optional cogeneration = lower operating cost and resilience during peak‑pricing events—think ERCOT (Electric Reliability Council of Texas) summer afternoons).

• “First logo” domino: One 20‑unit datacenter order would roughly double annual revenue and validate the tech across the sector.

• Credibility de‑risked: Vertiv partnership + NYSE uplist were big steps; this fresh equity raise tackles the remaining balance‑sheet worry.

With options trading, we have a new way to add exposure to this name, while using its volatility to our advantage.

Our Follow Up Trade On Tecogen 

What we did on Monday is sell the $5 strike puts on it expiring on January 16th, for $1.10.

One of two things will happen with that trade by January 16th: either those puts will expire worthless, and we'll keep $110 per contract, or we'll end up own more shares of of TGEN at an effective price of $3.90 (the $5 strike price of the puts minus the $1.10 premium we got for selling them). Either outcome would be acceptable. 

Our Next Trade 

Yesterday, ZeroHedge posted a list of stocks with the highest short interest as a percentage of their float ("It's The Meme Craze Of 2021 All Over Again: Here Are The Most-Shorted Stocks That Could Soar"). One of those stocks was also a top ten Portfolio Armor name as of Tuesday's close. A bullish bet on that one is going to be our next trade. If you'd like a heads up when we place it, you can subscribe to our trading Substack/occasional email list below. 

And if you'd rather add downside protection here, you can use our website or iPhone app.