I hate that this needs to be said these days but I used no AI (0%) in the writing of this document. All ideas mentioned are purely speculation and my own opinion. This is not financial advice. If you think AI was used, it says a lot about your own capabilities to write.
What's fueling the rocket hype?
I haven't noticed anyone mention how rockets get their fuel. So I looked it up. Liquid hydrogen and liquid oxygen are commonly used in the fuel, while liquid nitrogen is used in ground operations. Very few companies are able to transport liquid gases due to the need for extremely cold transportation (-300°F to -420°F). Linde is a company that specializes in general industrial gases. They have the world's largest liquid gas capacity (over 500 industrial gas plants) and distribution system.
Linde sells liquid oxygen and liquid nitrogen to SpaceX, enough to have opened a large air separation plant in Brownsville, Texas, to serve SpaceX's Starbase. This is probably be the leading reason for Linde to succeed on the rocket hype, however, SpaceX doesn't directly use liquid hydrogen in their rockets (they use kerosine and liquid oxygen), but other rockets do in fact use it. Nasa’s upcoming SLS rocket will use approximately 537,000 gallons of liquid hydrogen to launch. And this is only one of the several active rockets that use liquid hydrogen. China, Japan, and Europe all have rockets that use liquid hydrogen. From what I can tell, there are 8 ‘rocket families’ that use liquid hydrogen.
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Fueling the future of AI
Parallel to the rocket hype is the AI data center phenomenon. Well, a data center in California was the first one in the world to create a hydrogen based data center. They use liquid hydrogen as a form of electricity, which in turn generates pure distilled water that is fed back as a coolant. They claim 24/7 stationary power using this method. They have been operating “flawlessly” for over a year as a test project, and they are already building a plant 1000 times bigger in Texas, called the ECL TerraSite-TX1. They claim it is more efficient than traditional energy and is 100% off grid. If this becomes a popular method of powering data centers, it could be a massive benefit to Linde.
Where to go from here?
I would like to share a true personal story here. Back in high school (15 years ago) I had a teacher tell me to abstractly think about niche essentials in the stock market. As a specific example, he said companies that can transport liquid hydrogen, as it is difficult to do and there aren't that many companies that do it. For some reason, this stuck with me all these years, i don't know why. Well fast forward to last month, I saw a semi hauling what looked like liquid hydrogen and on the side of the truck read the words: "Linde". For some reason my high school teachers words popped in my head, and I went home, looked them up and decided they look like a strong company and I purchased $1000 of them. I will include a position that shows my date purchased for proof. This is to say, I purchased them BEFORE realizing anything I have said here.
Now that general rocket/space hype is coming out alongside the SpaceX IPO, as well as the potential liquid hydrogen future of AI data centers - I'm buying a lot more Linde. Linde’s stock currently sits at a $230 billion market cap, roughly their all time high, although two years ago in March and October of 2024 they hit a level similar to current price action. I think this points at the company being a strong company, with the potential to break out if they are recognized alon