In the ever-evolving landscape of technology, the rise of artificial intelligence has captured the spotlight, heralded as one of the most defining advancements in human history with promises of unprecedented wealth creation. Analysts at Bank of America project an astronomical addition of $15.7 trillion to the global economy by 2030 due to the AI revolution.
While the downstream applications of AI are often in focus for their transformative potential in our daily lives, the upstream ramifications of AI are equally profound, shaping industries that exist at the very foundation of this technological frontier.
The Crucial Hardware
At the forefront of this technological wave is Nvidia, a powerhouse in creating cutting-edge chips that are indispensable for driving AI-driven servers. Nvidia and its primary manufacturing partner, Taiwan Semiconductor; alongside competitors like Advanced Micro Devices, find themselves at the epicenter of the AI boom, akin to merchants supplying indispensable tools to gold miners at the height of a mining rush.
The Integral Role of Copper
Delving deeper into the supply chain reveals the indispensable role of copper, a vital metal that underpins the functionality of AI and the broader tech landscape. Beyond the familiarity of silicon in computer chips, copper acts as the linchpin that connects semiconducting components within integrated circuits, akin to the neural pathways in a brain, while also serving as the essential conduit for power transmission.
Moreover, the significance of copper extends far beyond chip manufacturing, permeating the entire electrical grid infrastructure. From turbines converting mechanical energy to electricity, batteries storing power, to the extensive network of wires and transformers transporting energy across the grid, copper emerges as the lifeblood of our modern technological ecosystem.
Surging Demand, Dwindling Supply
As global trends such as AI integration, electric vehicle proliferation, and decarbonization gain momentum, the demand for copper is on an upward trajectory. Projections by McKinsey & Company indicate that global copper demand is set to rise to 36.6 million metric tons by 2031, a significant leap from the current 25 million metric tonnes. Alarmingly, global supply is anticipated to fall short by 6.5 million metric tonnes by the same year, fueling concerns of a looming supply deficit.
The global capacity for copper mining and recycling is increasingly strained, with leading Chinese copper smelters recently reaching an agreement to curtail production due to raw material shortages, exacerbating fears of a supply crunch.
Given a confluence of escalating copper demand and a supply landscape under strain, the spotlight is now firmly on copper as an investment opportunity that stands at the cusp of potential windfalls.
Comprehensive Investment Approach
Recognizing the burgeoning trends, financial experts like Ivana Delevska and her team at Spear Invest have positioned themselves at the forefront of this emerging landscape. Spear Alpha ETF, their flagship fund, not only delves into companies directly leveraging AI like ZScaler and hardware producers such as Nvidia but also extends investments to the upstream sector, encompassing copper mining and processing entities like Freeport-McMoRan and Teck Resources.
This strategic diversity in holdings reflects a keen comprehension of the overarching technological panorama, a stance that appears to be paying off. SPRX has seen gains of roughly 70% in the past year, underscoring the prescience of such a holistic investment approach amidst the evolving dynamics of the AI era.