The artificial intelligence (AI) market was projected to reach US$305.90 billion in 2024, and market volume of US$738.80 billion by 2030.
But while, in recent years, AI has been a familiar theme for investors, its potential is now expanding across multiple sectors, driving innovative applications in industries such as agriculture and healthcare.
As investors seek exposure to beneficiaries of the AI boom, Global X investment strategist Marc Jocum has outlined key trends to watch in 2025.
“I think there’s going to be broader AI ecosystem growth, particularly around hyperscalers,” he told InvestorDaily.
“Companies like Meta, Amazon, Alphabet and Microsoft; they are projected to invest over $200 billion in their capital expenditure in 2024.”
A major portion of this sum is flowing to data centres – a trend Jocum expects to continue.
“OpenAI, which is backed by Microsoft, launched ChatGPT in November 2022. They are planning on investing in a five gigawatt data centre worth more than $100 billion. Amazon has done the same in North Indiana, at $11 billion. Google, $2 billion in Virginia. You can see that there’s a theme going on here.”
While the scale of data centre development has yet to be fully realised, the opportunity set has been common knowledge for some time.
As such, Jocum noted that the focus is shifting towards the supporting infrastructure. This includes lower-power central processing units (CPU), memory chips, network components and cooling systems, all of which will see increased demand to support AI-powered data centres.
Turning to sectors Jocum is particularly bullish on for 2025, he highlighted copper as a key investment.
“To power the amount of energy that comes out of these data centres, one gigawatt of data requires 65,000 tonnes of copper. So you’re talking about a lot of gigawatts coming out of these data centres, and you’re going to need a lot of copper to power that.”
A more topical discussion, however, revolves around the potential of nuclear energy. Over 2024, other market players have contended that, in order to power an automated, digitised future, the world needs an alternative power source.
“I think a lot of people are looking to add a highly dependable source of energy to power these data centres,” Jocum said.
“Because nuclear can be at full capacity 90 per cent of the time, a lot of these mega-cap tech companies are building out their data centres adjacent to these nuclear facilities and are looking to build out and partner with these small modular reactors to increase their nuclear capabilities.”
AI an enterprise-led technology … for now
Looking ahead, Jocum explained that while AI’s current growth is driven by mega-cap tech stocks, consumer demand is likely to follow in due course.
“That’s a clear distinguishing factor between the ‘dotcom boom’ and now. The ‘dotcom boom’ was really for consumer demand, and we didn’t have the infrastructure in place. Now this is an enterprise level thematic that’s driven from the enterprise level before going to the consumer.
“There are going to be certain pockets where things may do better than expected or do worse than expected,” he added.
Ultimately, the investment strategist underscored that an exchange-traded fund (ETF) wrapper is the ideal vehicle for allowing investors to reap the rewards.
“ETFs are owning a diversified basket of players within the AI space, and if one particular company either blows out their capex or doesn’t really realise their earnings expectations, then that could significantly impact the share price,” he said.
“That’s why owning a diversified set of companies exposed to an AI-related thing could protect investors from single company-specific risk. So that’s always an issue, and that’s why I believe that an ETF is the right wrapper to own, particularly with a thematic where you don’t know who is going to be the winner in the AI race for supremacy.”
