President Donald Trump’s latest bullish call on artificial intelligence is putting the spotlight on a part of the AI trade that extends well beyond Nvidia Corp (NASDAQ:NVDA) and mega-cap technology stocks.
In an interview with Punchbowl News on Friday, Trump said AI could ultimately become "bigger than oil," arguing that the country that wins the AI race will have a major economic advantage. He also warned that the U.S. "can’t let China beat us" in AI and criticized resistance to data-center development.
The comments come as hyperscalers continue committing hundreds of billions of dollars to AI infrastructure. For ETF investors, that spending creates a broader opportunity across chips, data centers, electricity networks and nuclear power.
AIQ Offers the Direct AI Play
The Global X Artificial Intelligence & Technology ETF (NASDAQ:AIQ) is the most straightforward way to capture Trump’s AI thesis. The fund invests in companies involved in AI development and the hardware required to process big data, such as Microsoft Corp (NASDAQ:MSFT), Palantir Technologies Inc (NASDAQ:PLTR), and Oracle Corp (NYSE:ORCL).
AIQ has almost $10 billion in assets, with a 0.68% expense ratio. It returned more than 20% year to date.
But investors looking for the next layer of the AI boom may find more interesting opportunities elsewhere.
SMH Targets the Silicon Behind AI
Every additional AI model and data center requires enormous amounts of computing power, making semiconductors one of the clearest beneficiaries of the buildout.
The VanEck Semiconductor ETF (NASDAQ:SMH) held around $70 billion in assets and charges a 0.35% expense ratio. Its portfolio includes Nvidia, Taiwan Semiconductor Manufacturing Co Ltd (NYSE:TSM), Broadcom, Inc (NASDAQ:AVGO), and Advanced Micro Devices Inc (NASDAQ:AMD). Nvidia alone accounts for more than 22% of the portfolio.
SMH gained 60% year to date, underscoring how aggressively investors have already priced the semiconductor boom.
The More Direct Data-Center Bet
Trump’s comments about data centers could make Global X Data Center & Digital Infrastructure ETF (NASDAQ:DTCR) particularly relevant.
DTCR owns companies that operate data centers and digital infrastructure, including Equinix Inc (NASDAQ:EQIX), Digital Realty Trust Inc (NYSE:DLR), American Tower Corp (NYSE:AMT) and Crown Castle Inc (NYSE:CCI). Equinix represented 12.4% of the portfolio and Digital Realty 13.2%. The fund had $2.13 billion in assets and a 0.50% expense ratio.
DTCR returned almost 30% year to date, highlighting the market’s enthusiasm for the physical infrastructure supporting AI.
The Infrastructure Spillover
AI data centers cannot operate without new substations, transmission equipment, construction and industrial machinery.
That makes the Global X U.S. Infrastructure Development ETF (BATS:PAVE) another way to play the theme. The $14.3 billion fund held companies such as Quanta Services Inc (NYSE:PWR), Eaton Corporation (NYSE:ETN) and Trane Technologies (NYSE:TT).
The scale of the opportunity is significant. The International Energy Agency expects global data-center electricity consumption to more than double to roughly 950 TWh by 2030, with AI-optimized servers driving much of the increase. In the U.S., data centers could account for almost half of electricity-demand growth through 2030.
The Nuclear Angle
That rising power requirement also strengthens the case for nuclear energy and uranium.
The Global X Uranium ETF (NYSE:URA) has $6 billion in assets, with a 0.69% expense ratio. Its largest holding was Cameco Corporation (NYSE:CCJ) at more than 22% of assets, while nuclear developer Oklo Inc (NYSE:OKLO) accounted for 6%.
URA’s year-to-date return was only about 4%, suggesting the nuclear trade has not kept pace with the broader AI and semiconductor rally.
Trump may be framing AI as the next oil. For ETF investors, however, the bigger takeaway may be that AI’s economic value depends on an enormous physical ecosystem. Chips compute it, data centers house it, grids power it and nuclear energy could help keep it running.
Photo: Shutterstock
Login to comment