For the past two years, markets have treated AI as a semiconductor story. And honestly, that made sense. Chips are tangible, exciting, and sit at the glamorous end of the value chain where margins are fat and every earnings beat feels like confirmation of a new industrial era.
But markets have a habit of crowding around the obvious winners first. The more interesting opportunity is usually one layer below.
AI is not just a compute story anymore. It is a power story. Every new model, every inference workload, every new data centre needs something far less exciting than a next-gen GPU. It needs electricity. Grid access. Cooling. Storage. Transmission. A system that can deliver reliable power at scale. And that is starting to matter just as much as the silicon.
The IEA has been fairly blunt about this. Global electricity demand is growing hard through 2030, and annual grid investment needs to rise by around 50 percent just to keep up. There are already more than 2,500 gigawatts of projects sitting in grid connection queues worldwide, renewables, storage, data centres, all waiting. That is not a minor operational headache. That is a structural bottleneck, and it is sitting right in the middle of the AI buildout.
So the question is no longer whether AI demand exists. It clearly does. The question is whether the physical world can keep pace.
The second-order winners are starting to show up
The first wave of AI beneficiaries was predictable: chipmakers, cloud platforms, software businesses with a convincing productivity story. The next wave looks a lot more industrial. Utilities. Grid equipment manufacturers. Electrical contractors. Transmission specialists. Battery storage operators. Cooling infrastructure providers. Businesses that have never once put the words “artificial intelligence” in a slide deck, but are sitting right in the path of where the capital needs to go.
This is classic second-order investing. The market narrative catches up to the underlying economics slowly, and the gap between those two things is where returns tend to live.
Part of what makes this interesting is the sheer nature of how AI demand lands. It does not arrive gradually. A data centre is not a theoretical increment on the grid. It is an enormous electricity customer that wants power immediately, wants it reliably, and does not care that grid upgrades and transmission projects can take years to approve and build.
Google is already signing agreements with utilities to curtail up to a gigawatt of data centre load during peak demand periods. Read that again. One of the most sophisticated technology companies in the world is now actively managing its energy flexibility as a core part of running its AI infrastructure. That tells you something important about where the real constraint is forming.
When the marginal unit of AI growth depends on access to power, scarcity shifts. Cheap electricity becomes a strategic asset. Grid stability stops being a regulatory footnote and starts driving earnings. The businesses that can connect, firm, manage, or supply power into this ecosystem gain real pricing power, even if they never show up in a fund manager’s tech basket.
The timing mismatch nobody is pricing properly
Here is the tension that the market still seems to be underestimating. AI capacity can scale in months. Physical energy infrastructure cannot. A new software application ships in weeks. A grid upgrade takes years. A transmission line can take longer than that.
Battery storage helps bridge the gap, but duration matters more than people realise. Reuters recently reported surging interest in long-duration energy storage technologies, pointing to a Google project in Minnesota pairing a 300 MW installation with a 30 GWh iron-air battery system capable of 100 hours of storage. That is a meaningful step beyond the short-duration battery model that has dominated investment conversations until now. It is also a sign that the industry is starting to think seriously about system architecture rather than just generation capacity.
Generating more electrons is not the whole answer. You also have to move them, store them, shape them, and deliver them reliably when needed. Transmission, interconnection, storage duration, demand response, behind-the-meter solutions, cooling and water infrastructure. These are not peripheral details. They are the bottleneck.
Why Australia is worth paying attention to
There is a tendency in local markets to assume the real AI opportunities are all offshore, ideally in a large US technology stock. That instinct deserves some pushback.
Australia’s power system is already showing what the next phase looks like. AEMO reported that renewables including storage exceeded 50 percent of the National Electricity Market’s quarterly energy mix for the first time in the December 2025 quarter. Battery discharge nearly tripled year on year. The pipeline of new projects connecting to the NEM hit a record 64 gigawatts. That is not just an environmental story. It is an investable infrastructure story.
A more renewable-heavy grid creates a premium for flexibility, storage, and grid intelligence. Intermittent generation can be enormously valuable, but only when the broader system can handle variability. AI data centres do not want intermittent power. They want continuous, high-quality, reliable supply. That gap between how renewables generate and how digital infrastructure consumes is exactly where value gets created.
You can already see this playing out locally. AirTrunk’s battery investment attached to its western Sydney data centre is a sign that operators know they cannot simply demand power from the grid and assume the system will absorb it. They need to be part of the solution. That shift matters, and it signals that the next phase of AI infrastructure is going to be more capital intensive, more regulated, and more industrial than most investors seem to expect.
Old economy businesses in new economy value chains
When a hot theme runs into physical constraints, markets eventually rediscover industrial businesses. Not because they become fashionable, but because they own the scarce assets everyone suddenly needs. That tends to produce a sharp rerating in companies tied to engineering services, energy networks, electrification, specialist manufacturing, and infrastructure software.
Australia has plenty of listed businesses sitting in the middle of these value chains without being priced as AI beneficiaries. The company supplying electrical balance of plant, designing substations, upgrading transmission systems, or enabling industrial cooling may have just as much earnings leverage to AI infrastructure growth as a more obviously branded technology name, and in some cases better valuation support to go with it.
The risks are real too
This is not a one-way trade. Rapid data centre expansion is already generating community pushback across parts of the United States over electricity bills, water usage, and local impact. Microsoft’s president acknowledged this week that winning community trust is now a genuine operational constraint, with opposition already cancelling projects in some areas.
The path from demand forecast to actual deployment is rarely clean. Planning delays, political resistance, and regulatory shifts can all slow how quickly any of this monetises. Buying anything adjacent to electricity and declaring victory is not a strategy. The better opportunities are in businesses with genuine competitive advantages, disciplined balance sheets, and exposure to durable bottlenecks rather than just the headline theme.
The bigger picture
Every major technology cycle follows roughly the same arc. The first phase rewards invention. The second rewards deployment. The third rewards the infrastructure that makes adoption possible at scale. Railways needed steel. The internet needed fibre. Cloud computing needed hyperscale campuses. AI needs power. Literally. Not as a metaphor.
When an industry starts talking in gigawatts rather than gigabytes, the businesses that can deliver electricity, move it, stabilise it, and store it deserve a lot more attention than they are currently getting.
That is where the bottleneck is forming. And bottlenecks, identified early, are usually where the best returns are found.
The TAMIM Takeaway
The market’s fixation on chips and software may be causing it to miss the next wave of AI beneficiaries. The real constraint is increasingly electrical infrastructure. Grids, storage, transmission, cooling, and flexible power management are becoming strategic assets in the AI buildout. For investors, that opens up a broader opportunity set in industrial and infrastructure-linked businesses that are not yet being priced as AI winners. The next phase of the AI boom may have less to do with glamour and more to do with transformers, substations, batteries, and grid access.
When oil prices spike, the market’s first instinct is almost always the same. Buy energy producers. Sell airlines. Dust off the inflation playbook. Then pretend that understanding the direct effect is the same as understanding the whole story.
It rarely is.
The first-order effects of an oil shock are obvious, and because they are obvious, they tend to be priced quickly. The more interesting investment work starts one layer deeper. What happens next, after the initial surge in crude? Which industries quietly gain pricing power? Which cost structures start to buckle? Which parts of the economy get squeezed in ways the market does not fully appreciate until months later?
That is where the real analysis begins.
This matters right now because the current disruption is not a routine commodity wobble. The situation around the Strait of Hormuz has reminded markets that a chokepoint can very quickly become the centre of the global pricing mechanism, not just for oil, but for a much wider set of costs that ripple through the real economy.
That is the starting point. But it is not the investment conclusion.
The conclusion should be that this is not just an oil story. It is a freight story, an insurance story, a chemicals story, a fertiliser story, a gas story, a rates story, and eventually, a market leadership story. That broader lens matters because investors who read an oil spike too narrowly tend to miss the businesses whose economics are quietly changing in slower, subtler, and often more durable ways.
The first winners are obvious. The next ones are more interesting.
The obvious winners from higher crude prices are upstream oil producers and, in some cases, refiners. The obvious losers are transport-heavy businesses that cannot pass on higher fuel costs quickly enough. But that is only the first layer.
When supply dislocates, not every part of the value chain suffers equally. Businesses with advantaged access to feedstock, alternative shipping routes, or more flexible supply chains can actually see margins expand even as the broader system comes under pressure. In commodity shocks, the real money is often not made in the commodity itself. It is made in the businesses sitting at the chokepoints, the ones that can still source product, still process it, still move it, or still finance it when others cannot.
Refiners with secure non-Hormuz crude access can benefit. Shipping insurers can benefit. Pipeline and storage owners can benefit. Domestic energy producers in safer jurisdictions can benefit. Industrial businesses exposed to energy security capex can benefit. Even parts of the alternative energy ecosystem can benefit if persistent fossil fuel volatility accelerates the shift away from traditional sources.
In other words, higher oil does not just reward oil. It rewards resilience.
The shipping route is the story, but insurance is one of the hidden toll booths
One of the easiest second-order effects to miss is insurance.
When investors talk about disruptions in the Strait of Hormuz, they focus on vessels, cargo, and oil flows. That is sensible. But before cargo can move through a conflict zone, someone has to underwrite the risk, and that is where the economics can change very quickly.
War-risk cover, cargo cover, liability cover, all of these things begin to matter more when a route moves from commercially efficient to politically hazardous. When insurance premiums jump, the costs do not just sit with the underwriter. They cascade through freight markets, working capital requirements, delivery economics, and end-customer pricing.
The market sees higher oil. The deeper reality is that conflict reprices risk all the way through the logistics chain. Insurance costs rise. Financing conditions tighten. Some routes become uneconomic. Working capital requirements increase. Delivery schedules blow out. Inventory strategies change. Businesses that looked efficient under normal conditions suddenly look fragile.
The winners are often the intermediaries who can price that risk correctly, or the operators with enough scale and balance sheet strength to absorb the disruption. The losers are usually the businesses that built their economics around stability.
Gas may matter even more than oil
This is where the story becomes more nuanced, and frankly more interesting.
A lot of market commentary still treats oil as the master variable. But in many modern economies, particularly those dependent on imported LNG or gas-fired electricity, the second-order hit from gas can be worse. Gas feeds power prices. Power prices feed industrial costs. Industrial costs feed manufacturing margins, fertiliser economics, chemicals production and consumer prices.
So while oil gets the headlines, gas may do more of the economic damage.
Oil is comparatively easy to store and reroute. Gas is not. It needs specialised infrastructure, dedicated shipping, and a system that does not adapt quickly in a crisis. That makes it more brittle, and often more painful when things go wrong.
Industrials with heavy gas exposure become more vulnerable. Fertiliser producers reliant on gas feedstock come under pressure. Regions with domestic gas supply gain strategic value. Power systems with meaningful renewables and storage penetration become more attractive. Utilities and infrastructure operators that can reduce reliance on imported gas may end up far more important than the market currently assumes.
This is why a geopolitical energy shock can end up rewarding businesses that have nothing to do with drilling for oil.
Airlines are the visible losers, but transport inflation rarely stops there
Transport is usually where the market expresses its first bearish instinct, and for good reason. Higher jet fuel prices hurt airlines quickly. But again, the more interesting analysis comes after that.
Higher fuel costs do not only matter for airlines. They matter for tourism demand, logistics costs, imported goods, delivery economics, cold chain businesses, online retail margins, and any company whose model depends on frictionless movement of goods or people.
At first, the market tends to focus on who has to pay more for fuel. Later, it realises the bigger question is who actually has pricing power. Which airlines can pass on higher fares? Which freight companies can surcharge? Which retailers can absorb higher shipping costs? Which manufacturers get caught between rising input costs and weak customer demand?
That is where margin compression shows up. It is also where quality separates itself from fragility. Strong balance sheets, disciplined pricing, essential products and domestic revenue bases all start to matter more in an inflationary transport shock.
Fertilisers, chemicals and food are where the economic pain broadens
This is another area where the second-order effects can be larger than the headline market reaction.
Petrochemicals sit inside packaging, plastics, industrial inputs and consumer goods. Fertilisers sit upstream of food. Add transport disruption on top, and inflation stops being confined to the energy complex. It starts leaking into supermarket shelves, industrial invoices and corporate gross margins.
This is how an oil shock migrates from financial markets into the real economy.
For investors, this is where the conversation shifts from commodity exposure to earnings quality. Businesses with low input intensity, high gross margins and strong pricing power often emerge in better shape than businesses that look cheap but rely on stable commodity and freight costs. Consumer companies with strong brands can sometimes pass on costs. Commodity processors without pricing flexibility often cannot. This is where apparently defensive businesses can suddenly start looking cyclical.
The macro effect is not just inflation, it is a possible change in market leadership
A sustained rise in oil and gas prices does not just mean higher CPI prints. It means central banks become more cautious, bond yields can stay firmer for longer, duration becomes less attractive, and market leadership can rotate away from speculative growth and back toward cash-generative, asset-backed, pricing-power businesses.
That is why these shocks matter far more than the daily move in Brent.
The first-round effect is oil going up. The second-round effect is everything else repricing around it. Wages. Food. Freight. Expectations. Policy. Equity multiples. That is where the real impact sits.
For markets, the risk is not only inflation itself. It is that inflation persistence forces a repricing of what investors are willing to pay for long-duration assets. In that world, boring can become beautiful very quickly. Infrastructure, domestic energy exposure, insurance, transport assets with pricing power, and resilient industrial businesses all start to look more attractive than highly valued growth stories that depend on falling rates and perfect execution.
Energy security spending may become the quiet winner
Every genuine supply shock teaches the same lesson. Efficiency is wonderful until resilience becomes scarce.
When a fifth of the world’s oil flows through a chokepoint that can suddenly seize up, boards and governments rediscover the value of redundancy. They spend more on storage, pipelines, alternative supply routes, domestic generation, backup systems and energy diversification. That has obvious policy implications, but it also has direct investment implications.
Infrastructure tied to energy resilience becomes more valuable. Domestic producers gain strategic importance. Grid assets, storage systems, LNG infrastructure, pipeline networks and alternative generation sources can all benefit from a sustained rethink on security of supply.
This is particularly important for investors who prefer second-order beneficiaries to headline commodity bets. You do not have to predict the exact oil price to conclude that a serious energy shock will likely increase spending on resilience, and resilience spending tends to last longer than panic buying in futures markets.
The best opportunities may sit where the market is not looking yet
When the narrative is loud, investors crowd into the obvious trade. In this case that means energy producers, defence names and perhaps a few shipping stocks. But the better opportunities often lie in the quieter businesses that are simply becoming more important.
Insurers that can underwrite risk at the right price. Domestic gas suppliers in safer jurisdictions. Infrastructure operators with irreplaceable assets. Companies that enable substitution away from volatile imported energy. Industrials linked to grid upgrades, storage, backup power or transmission.
There is another path worth considering too. A fossil fuel shock does not always benefit fossil fuels alone. It can accelerate investment into alternatives that suddenly look more attractive when incumbent energy systems become unstable. Solar, batteries, backup systems and grid flexibility all gain appeal when energy security becomes a live boardroom issue rather than a policy slogan.
The real opportunity is usually not in the first-order move. It is in the strategic response to it.
The TAMIM Takeaway
A spike in oil should never be read too narrowly. The first-order effect is obvious and usually priced quickly. The second-order effects are where the more durable opportunities and risks sit. This kind of shock does not just lift crude, it reprices gas, freight, insurance, fertilisers, food and inflation expectations. That has implications for sector margins, central bank behaviour, market leadership and capital spending on energy resilience.
The obvious winners are upstream producers. The more interesting winners may be refiners with advantaged access, insurers writing war-risk cover, domestic energy and infrastructure assets, and businesses tied to storage, transmission and energy security.
But investors should also keep one eye on what might be called the TACO risk, which stands for Trump Always Chickens Out. Markets have learned, sometimes reluctantly, that maximum rhetoric does not always translate into maximum action. If the geopolitical heat fades, if the trade and tariff threats soften, or if the market starts to believe the bark will again prove worse than the bite, then some of the more obvious oil and panic trades could unwind just as quickly as they appeared. That does not invalidate the second-order framework. It simply means discipline still matters. The goal is not to chase every spike in the barrel, but to identify the businesses whose strategic relevance improves even if the headline shock proves shorter, noisier and more theatrical than durable.
This week’s TAMIM Reading List reflects a market environment increasingly shaped by volatility, structural change and shifting expectations. Oil’s sharp move toward $100 highlights how quickly geopolitical risks can ripple through global markets, even as prices remain sensitive to supply developments. At the same time, attention is turning to longer-term transitions, from China’s push toward consumption-led growth to uneven progress in global energy systems. In parallel, the rapid integration of AI is forcing businesses to rethink how they invest, operate and generate returns. New insights into AI-driven productivity and organisational transformation suggest that execution, not just adoption, will define winners. Against this backdrop, companies are also being challenged to adapt strategy in a world of constant shocks and heightened uncertainty. Even workplace dynamics are evolving, as expectations around leadership, communication and feedback continue to shift.
There is a peculiar habit in markets, one that repeats itself with almost comic reliability, where investors become so transfixed by what is loudly obvious that they entirely miss what is quietly important, and today feels very much like one of those moments, with capital crowding into the same well-worn narratives around artificial intelligence, mega-cap dominance, and macro theatrics, while a different and far more durable transformation is taking place in parts of the market that, at first glance, appear almost aggressively uninteresting, and it is precisely in these corners, where perception lags reality, that some of the most compelling opportunities tend to reside, not because they are hidden in any literal sense, but because they are hiding behind labels that are no longer accurate, classifications that have not kept pace with evolution, and investor heuristics that prefer familiarity over nuance.
London Stock Exchange Group: The Bloomberg You Didn’t Notice
Take the London Stock Exchange Group, which most investors still lazily file away as an exchange operator, as though its primary function were to ring bells and list companies, when in truth that description is now so incomplete as to be borderline misleading, because what LSEG has been quietly engineering over the past several years is a deliberate and rather elegant migration away from transactional, volume-driven revenues toward something far more attractive, namely recurring, subscription-based data and analytics, the kind of business model that has made Bloomberg indispensable, S&P Global richly valued, and Moody’s quietly formidable, and yet, despite the evidence sitting plainly in the numbers, with margins expanding, earnings inflecting, and the contribution from data businesses steadily increasing , the market continues to apply a valuation framework that reflects what the company used to be rather than what it is becoming, which is a familiar and often lucrative disconnect for those willing to look beyond the surface.
What makes this transition particularly compelling is not simply the shift in revenue mix, but the operating characteristics that accompany it, because data businesses, once established, tend to exhibit a form of economic resilience that is both rare and highly prized, with high switching costs, embedded workflows, and pricing power that compounds over time, and when you combine that with the sort of operating leverage that emerges as incremental revenue drops through at high margins, you begin to see why EBITDA margins are trending toward levels that would have been inconceivable for a traditional exchange operator only a few years ago, and why earnings per share are now stepping higher in a way that suggests a structural rather than cyclical improvement.
Of course, markets rarely reprice these transitions immediately, and in LSEG’s case there are several convenient excuses for inertia, including the lingering perception of complexity across its multiple divisions, the integration overhang from past acquisitions, and the general tendency for investors to anchor to legacy business models long after they have ceased to be dominant, but these are transient considerations, whereas the shift toward data and analytics is not, and when you layer on the presence of an activist shareholder, ongoing share buybacks, and a management team that appears increasingly focused on capital efficiency, the ingredients for sustained re-rating begin to assemble themselves in a way that is difficult to ignore, even if the market has not yet fully caught on.
Orix Corporation: Capital Allocation in Disguise
Orix presents a different, though no less interesting, expression of the same underlying phenomenon, in that it is commonly described as a leasing company, which is technically correct in the same way that calling a symphony orchestra a collection of instruments is technically correct, but fails entirely to capture the orchestration, because Orix is, in reality, a sprawling and increasingly sophisticated capital allocation platform that sits directly in the flow of global private sector investment, financing equipment, infrastructure, real estate, and private equity opportunities across multiple geographies, and in doing so, positioning itself as a leveraged participant in any sustained increase in capital expenditure, which, given the current global backdrop of energy transition, industrial reshoring, and digital infrastructure build-out, is hardly a trivial tailwind.
The recent financial performance provides a useful window into how this model is evolving, with the company delivering a rather striking 70 percent year-on-year increase in net profit, driven in part by asset sales and portfolio optimisation, but more importantly by a willingness to actively recycle capital rather than passively hold it, which is often the difference between mediocre and exceptional capital allocators, and when management follows this up by raising earnings guidance, targeting a meaningful improvement in return on equity, and increasing share buybacks, it suggests a degree of confidence that is not always present in businesses of this type, particularly in Japan, where conservatism has historically been both a strength and a constraint .
There is also a broader structural context worth considering, because Japan itself is undergoing a quiet but meaningful transformation, with corporate governance improving, balance sheets being optimised, and capital being redeployed more efficiently than in previous decades, and Orix, by virtue of its positioning, stands to benefit disproportionately from this shift, not only as a financier of new investment but as an active participant in private markets, where returns can be both higher and less correlated than in public equivalents, and yet, despite these favourable dynamics, the company continues to trade at valuation levels that imply a far more pedestrian future, with price-to-book and earnings multiples that do not fully reflect its improving return profile or its growing exposure to higher-return activities, which, again, is precisely the sort of disconnect that long-term investors should find intriguing.
Dai Nippon Printing: The Semiconductor Company Nobody Calls a Semiconductor Company
Then there is Dai Nippon Printing, perhaps the most egregiously mischaracterised of the three, not least because its very name encourages a form of intellectual laziness, anchoring investors to the idea of a traditional printing business in structural decline, when the reality is that a meaningful portion of its value resides in its role within the semiconductor supply chain, specifically in the production of photomask blanks used in advanced lithography processes, which are essential for manufacturing chips at the leading edge of technological capability, including 3 nanometre, 2 nanometre, and even more advanced nodes that are still on the horizon.
This is not a commoditised activity, nor is it easily replicated, because the precision required in photomask production is extraordinary, with tolerances measured in fractions of nanometres and error rates that must approach theoretical limits, and DNP has positioned itself within this niche through the development of advanced technologies such as multi-beam mask writing, which enables the production of increasingly complex patterns required for next-generation chips, and through collaborations with emerging players such as Rapidus, which is aiming to establish 2 nanometre mass production capability by 2027, thereby embedding DNP even more deeply into the future of semiconductor manufacturing.
And yet, despite this exposure to one of the most strategically important industries in the global economy, the company continues to be valued as though it were primarily a legacy industrial business, with modest growth expectations, relatively low margins, and valuation multiples that do not reflect the scarcity value of its semiconductor-related capabilities , which is a classic example of classification lag, where the label applied by the market fails to capture the underlying reality, and while such mismatches can persist for longer than one might expect, they rarely persist indefinitely, particularly when the underlying business continues to evolve in ways that are difficult to ignore.
The TAMIM Takeaway
What ties these businesses together is not geography, sector, or even end market, but rather the simple and often overlooked fact that each of them is in the process of becoming something more valuable than the market currently gives it credit for, whether that is an exchange transforming into a data utility, a leasing company operating as a global capital allocator, or a printing business underpinning semiconductor manufacturing, and in each case the transformation is not speculative or hypothetical but already underway, visible in the financials, evident in strategic direction, and supported by structural tailwinds that are unlikely to reverse in any meaningful way.
The challenge, as always, is that markets are far more comfortable pricing what is already obvious than what is still emerging, and as a result, opportunities tend to arise in that uncomfortable space between perception and reality, where businesses are changing faster than the narratives that surround them, and where valuation frameworks have yet to catch up with economic substance, and while this may not provide the immediate gratification of more fashionable investments, it does offer something arguably more valuable, which is the potential for sustained, long-duration compounding as the gap between what a business is and how it is perceived gradually closes.
In a market increasingly dominated by noise, narrative, and the relentless pursuit of the next obvious theme, it is perhaps worth remembering that some of the most rewarding investments are not those that shout the loudest, but those that quietly, persistently, and somewhat inconveniently defy easy categorisation, because it is in that ambiguity, rather than in consensus, that true opportunity often resides.
Disclaimer: London Stock Exchange Group, Orix Corporation and Dai Nippon Printing are held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.
A few weeks ago, in The Middle East Build-Up: What Investors Must Think About Now, we argued that investors did not need to predict war, they needed to prepare for its consequences. The core view was simple. If the US and Iran moved toward open conflict, oil would spike, defence would rerate, bond markets would wobble, and the real opportunity would sit not in the first panic trade but in structurally advantaged businesses linked to energy security, strategic infrastructure, and government-backed capital allocation. That framing has, broadly speaking, held up.
Since then, the Strait of Hormuz has gone from theoretical risk to live market stress. Reuters reported that the disruption amounted to the largest oil-supply shock on record, with Brent settling above $100 a barrel on March 12, before prices whipsawed lower as some vessels began moving again and strategic reserve releases came into view. By March 17, oil had bounced again after renewed Iranian attacks on UAE energy infrastructure. In other words, the market has not priced a clean, linear oil shock. It has priced chaos, partial reopening, fresh escalation, and a very large geopolitical risk premium.
That matters because the lesson is not merely that oil went up. The lesson is that modern geopolitical shocks travel through physical systems first and financial markets second. Ships stopped. Insurers repriced. refiners recalibrated. traders scrambled. and then retail arrived late to the party with maximum emotion and minimum edge. The original article’s advice to focus on “the physical reality” rather than headline theatre looks even more relevant now.
1. The market got the direction right, then briefly lost its mind
The first phase of the move was rational. When a critical chokepoint that handles roughly a fifth of the world’s oil supply is effectively shut, oil should rise. That is not speculation. That is arithmetic with missiles attached. But what happened after that is a good reminder that price action and good investing are not always the same thing. Reuters noted a near 50 percent jump in US crude at one point, while your additional inputs highlight a historic surge in activity in the US Oil Fund as the Strait of Hormuz escaped commodity-desk containment and became a retail timeline obsession. Prices then violently retraced, despite all the noise, because markets had already sprinted far ahead of the underlying flow data.
That is exactly why investors should be careful around obvious geopolitical trades. Once a conflict becomes a mainstream narrative, the cleanest money is often already made. By the time everyone becomes a self-appointed expert in tanker routing, much of the easy oil beta has been taken. That does not mean the thesis is wrong. It means the expression of the thesis matters. Owning a futures-linked ETF after a 45 percent weekend move is not the same thing as owning strategically important infrastructure before the market fully appreciates how much pricing power and policy support it can attract.
2. The real opportunity is still energy security, not crude heroics
The core point from the original article remains intact. Energy security is not a one-week trade. It is a multi-year repricing of assets that move, store, insure, process, and protect hydrocarbons and gas. Europe learned after Ukraine that cost optimisation was a luxury good. This Hormuz shock is teaching Asia a similar lesson at much shorter range. The IEA’s March report still sees global oil demand rising in 2026, albeit more slowly than previously expected because high prices and disruption are already denting activity. It also expects global LNG supply growth above 7 percent in 2026, the fastest pace since 2019, with North America driving most of the increase.
That is why the investment lens should widen beyond crude itself. Tankers, LNG carriers, pipelines, storage, export infrastructure, marine insurance, and oil field services all sit in different parts of the same chain. Your Energy Security SPV one pager makes this point well: VLCCs offer spot leverage to disruption, LNG tankers provide contracted visibility, pipelines bring defensive cash generation, and oil field services give exposure to the capex cycle and reserve replacement. That is a much more interesting portfolio than simply shouting “oil higher” and hoping Mr Market mistakes adrenaline for process.
The shipping data reinforces that view. War-risk premiums on Gulf shipping jumped by more than 1000 percent in some cases, and some market reports suggested transits through Hormuz fell more than 80 percent at the worst point. Even where cover remained available, pricing moved sharply higher and vessel economics changed overnight. This is exactly what a structural rerating looks like. Not a straight line up in the commodity, but a broad repricing of bottlenecks, compliance, logistics, and replacement capacity.
3. The second-order trade is bigger than the first-order trade
This is where the update becomes more interesting than the original piece. The conflict has landed in a market that was already undergoing a deeper rotation, away from capital-light stories and toward capital-heavy reality. Your additional inputs on the “atoms versus bits” theme are timely. AI may still be a software revolution in narrative terms, but in capital allocation terms it is an industrial build-out. Data centres need turbines, transmission, cooling, semis, concrete, pipes, ships, and power. Add an energy-security shock on top, and the market’s appetite for hard-asset cash flows starts to look less cyclical and more regime-like.
We are already seeing evidence of that in the broader energy complex. LNG demand expectations remain strong, with Shell now forecasting global LNG demand to rise 54 to 68 percent by 2040, driven mainly by Asia. That does not mean every LNG-related stock is cheap, and it certainly does not mean software is dead, despite the periodic joy some commentators seem to derive from writing SaaS obituaries with all the restraint of a man live-tweeting the end times from a standing desk. It does mean, however, that capital-heavy businesses linked to power, transport, and industrial supply chains now have a tailwind from both AI capex and geopolitical insecurity.
For investors, this is a meaningful change. In the prior regime, the elegant answer to most market questions was “buy quality software and ignore the plumbing.” In the current regime, the plumbing is becoming the thesis. That does not make software uninvestable. It just means asset intensity is no longer an automatic sin. In many cases it is becoming a moat.
4. What I would own here, and what I would avoid chasing
I would still favour four buckets.
First, energy infrastructure with pricing power and strategic importance, especially where cash flows are visible and balance sheets are not heroic works of fiction.
Second, shipping and logistics assets where dislocation has improved economics but the asset owner is not dependent on one glorious quarter to justify the valuation.
Third, select oil field services, because reserve replacement and allied production growth do not happen by wish, slogan, or climate panel. They happen with equipment, expertise, and crews.
Fourth, defence and strategic technology, though I would be more valuation-sensitive here because many names have already enjoyed their first rerating since the conflict began. The original article’s point still stands: long-term contracts, backlog, and differentiation matter more than headline beta.
What would I be careful with? Anything that requires falling rates, cheap fuel, strong consumer confidence, and immaculate market mood to justify its multiple. The market can withstand one of those assumptions breaking. It struggles when all of them start wobbling at once. If energy remains volatile and inflation expectations reawaken, then expensive duration assets are vulnerable again. This is not a call to dump every growth stock. It is a reminder to distinguish between businesses with earnings and businesses with vibes dressed up as discounted cash flow models.
5. The newest lesson: follow flows, not feeds
Perhaps the most useful addition from your new inputs is behavioural rather than macro. The Hormuz episode became a social-media object. Search interest in oil surged, retail trading appeared to pile into energy proxies, and the narrative briefly outran the underlying fundamentals. Professionals are often wrong, but they are rarely wrong in quite such a cinematic fashion. Retail’s comparative advantage is not chasing a tanker bottleneck after it has already become a meme.
The broader lesson is simple. In a geopolitical shock, watch ship flows before pundits, insurance premiums before hashtags, and corporate capex before catchphrases. The timeline is very good at producing urgency and very bad at producing edge.
The TAMIM Takeaway
The February article was directionally right, but the last two weeks have sharpened the message.
Yes, geopolitical conflict can create violent commodity moves. Yes, defence and energy names can rerate quickly. But the more durable opportunity sits one layer deeper, in the businesses that make energy systems more redundant, more secure, and more politically indispensable.
That is why I would continue to focus on energy infrastructure, selected shipping, LNG-linked assets, pipelines, and oil field services, while remaining disciplined on valuation and sceptical of anything that has already been turned into a retail battlefield. The market’s first instinct was to buy the drama. The better instinct is to own the toll roads.
In uncertain times, hard assets, cash flow, strategic relevance, and balance-sheet strength tend to become more valuable, not less. The Strait of Hormuz has reminded investors of something markets periodically forget, usually right before relearning it the expensive way: the world still runs on physical systems, and physical systems matter most when they fail.
Take the London Stock Exchange Group, which most investors still lazily file away as an exchange operator, as though its primary function were to ring bells and list companies, when in truth that description is now so incomplete as to be borderline misleading, because what LSEG has been quietly engineering over the past several years is a deliberate and rather elegant migration away from transactional, volume-driven revenues toward something far more attractive, namely recurring, subscription-based data and analytics, the kind of business model that has made Bloomberg indispensable, S&P Global richly valued, and Moody’s quietly formidable, and yet, despite the evidence sitting plainly in the numbers, with margins expanding, earnings inflecting, and the contribution from data businesses steadily increasing , the market continues to apply a valuation framework that reflects what the company used to be rather than what it is becoming, which is a familiar and often lucrative disconnect for those willing to look beyond the surface.
Orix presents a different, though no less interesting, expression of the same underlying phenomenon, in that it is commonly described as a leasing company, which is technically correct in the same way that calling a symphony orchestra a collection of instruments is technically correct, but fails entirely to capture the orchestration, because Orix is, in reality, a sprawling and increasingly sophisticated capital allocation platform that sits directly in the flow of global private sector investment, financing equipment, infrastructure, real estate, and private equity opportunities across multiple geographies, and in doing so, positioning itself as a leveraged participant in any sustained increase in capital expenditure, which, given the current global backdrop of energy transition, industrial reshoring, and digital infrastructure build-out, is hardly a trivial tailwind.
Then there is Dai Nippon Printing, perhaps the most egregiously mischaracterised of the three, not least because its very name encourages a form of intellectual laziness, anchoring investors to the idea of a traditional printing business in structural decline, when the reality is that a meaningful portion of its value resides in its role within the semiconductor supply chain, specifically in the production of photomask blanks used in advanced lithography processes, which are essential for manufacturing chips at the leading edge of technological capability, including 3 nanometre, 2 nanometre, and even more advanced nodes that are still on the horizon.
