The public face of modern computing is intangible. In daily life, we see and use generative AI, diagnostics, virtual assistants and intelligent algorithms.
But it looks quite different behind the scenes. A complex infrastructure supports the hardware, networks and systems that power AI.
Justin Lin is an investment strategist at the exchange-traded fund (ETF) provider Global X, where he performs research and analysis across commodities and the energy transition. “Alongside the advancements of AI models, which are getting smarter by the day,” he says, “the interesting part is the infrastructure and commodities underlying them.”
In particular, he says, AI data centres are changing the nature of demand for electricity, putting increased pressure on electrical infrastructure.
“The most immediate play a lot of investors think about is investing in data centres or utility companies providing the electricity,” Lin says. “But the bigger picture is the demand for more robust and expanded infrastructure in terms of the grid.”
Energy for generative AI technologies
With electricity so critical to advanced technologies, copper is in high demand, along with uranium and nuclear power, as well as metals required to support energy generation such as solar, which relies on silver.
However, Lin says plenty of attention is also being focused on the precise manufacturing processes behind components such as permanent magnets, which use rare earth minerals including neodymium, praseodymium and terbium. These materials are also used in cooling systems, robotics, electric motors and other specialised hardware embedded in AI systems.
‘Demand for everything’
Such expansive demand, Lin says, is unprecedented. Historically, rapid technological evolution has focused on a single commodity.
“The megatrend around AI involves the most commodities that we’ve ever seen,” he says. “Think about previous megatrends … the electrification of the world was a pure copper play. If you go even further back, the creation of locomotives was a stimulant for coal demand.”
Now, he says, AI is “creating demand for everything”, from exotic metals for chips to lithium for batteries – and this represents a growing opportunity. “For investors, there are more options than would be traditionally available.”
It’s a long-term investment case, Lin says. The AI trade is nascent, even as it becomes part of our everyday life. But as development continues – whether that be in building data centres, electrification of the grid, or shifts towards clean energy – so will the sourcing, processing and distribution of commodities. Global X offers multiple ETFs that cover commodities crucial to the AI race, from copper under ASX: WIRE to critical metals under ASX: GMTL.
“In the grand scheme of development, these are multi-decade trends that have to be executed on a global scale,” Lin says. “We believe there is a lot of potential value still to come.”
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