BlackRock Reveals Where the Real AI Money Is Going

TLDR

• BlackRock strategist Ben Powell says AI infrastructure spending will continue to accelerate as tech companies compete for market dominance
• Companies providing hardware, energy, and materials are better positioned for steady gains than AI model developers
• Major tech firms have only started using credit markets to fund AI expansion, suggesting more investment is coming
• S&P Global estimates data center power demand could nearly double by 2030 driven by AI infrastructure needs
• Powell expects “positive surprises” for stocks in chips, energy, and copper wiring sectors throughout the next year

BlackRock’s chief investment strategist for APAC Ben Powell spoke at Abu Dhabi Finance Week on December 8. He told CNBC that spending on AI infrastructure shows no signs of slowing down.

The “picks and shovels” reference points to companies making hardware, providing energy, and manufacturing materials like copper wiring. These suppliers support the data centers and computing systems that power AI development.

Tech giants are racing to secure advantages in what they view as a winner-takes-all market. Powell said the big companies are behaving as if coming in second place means being shut out completely. This mindset is driving them to spend heavily even if they risk overdoing it.

Nvidia became the first company to briefly surpass $5 trillion in market value this year. The chip maker’s GPUs are essential for training and running AI models. This milestone sparked debate about whether markets are experiencing an AI bubble.

Microsoft and OpenAI reached a restructuring agreement in October to support OpenAI’s fundraising efforts. Reuters reported that OpenAI is preparing for an initial public offering that could value the company at $1 trillion.

Tech Companies Turn to Credit Markets

Amazon and Meta have each budgeted tens of billions of dollars annually for AI-related investments. These companies are securing chip supply agreements and power commitments years in advance.

Grid operators from the United States to the Middle East are working to meet rising electricity demand from new data centers. S&P Global estimates that data center power demand could nearly double by 2030.

Hardware and Energy Sectors Expected to Benefit

The projected growth will come from hyperscale facilities, enterprise data centers, leased locations, and crypto-mining sites. All these operations compete for the same limited power resources.

Powell expects infrastructure suppliers to see steady gains. He said companies making chips, generating energy, and producing copper wiring are in a good position to benefit. Powell anticipates “positive surprises driving those stocks in the year ahead.”

BlackRock is focusing investment attention on these infrastructure providers rather than the AI model developers. Powell believes the hardware, energy, and materials sectors will offer more reliable returns than AI software companies.

The capital expenditure surge is reshaping global supply chains. Companies are locking in long-term procurement agreements for chips and power across multiple continents. This spending pattern is transforming industrial sectors far beyond Silicon Valley.

Powell described the situation as having “more tailwinds than headwinds” for the AI infrastructure cycle. Major tech companies continue to pour unprecedented sums into hardware, cloud expansion, and power procurement as they compete for AI market dominance.

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