artificial intelligence<\/a> heavyweights cools, some investors are pivoting to infrastructure companies they expect to benefit from AI capital spending, a shift that is spawning a slew of new products.<\/p>\nAfter huge gains in recent years, shares in AI tech giants such as \u200cAlphabet and Amazon have suffered sharp declines as investors worry returns from their massive investment in developing smarter AI systems won’t justify such lofty valuations. To profit from \u200cthat spending spree, investors are focusing on the companies getting the checks — chipmakers, data center builders and utility firms providing the physical nuts and bolts behind the AI revolution, say asset managers.<\/p>\n
Many such stocks, including Caterpillar , optical communications \u200bprovider Lumentum and data storage company Western Digital have posted double-digit gains this year, while the S&P 500 has returned 0.52% and the Roundhill Magnificent 7 ETF, which captures the performance of the so-called AI hyperscalers, has lost 7.3%.<\/p>\n
NEW AI INFRASTRUCTURE PRODUCTS<\/p>\n
That performance is spurring exchange-traded fund providers such as BlackRock, VistaShares and Impax Asset Management to rejig their offerings and launch new products, with some betting on a diverse — and increasingly niche — roster of AI infrastructure plays.<\/p>\n
“Our goal is that every time someone like Meta or Amazon invests in a data center, the cash registers ring across our portfolio,” said \u200cAdam Patti, CEO of VistaShares, which launched its Artificial Intelligence Supercycle \u2060ETF in December 2024. It gained 58.4% in 2025 and is up 16.87% this year.<\/p>\n
While the ETF includes AI heavyweight Nvidia, the semiconductor giant’s weighting is less than half that of South Korea’s SK Hynix, whose chips are used in data centers. The ETF’s other top holdings include chipmakers \u2060like Micron and Intel.<\/p>\n
“When Meta says that it\u2019s going to spend $100 billion, it’s going into these companies,” said Patti.<\/p>\n
Likewise, BlackRock’s iShares A.I. Innovation and Tech Active ETF now has 74% of its $8.8 billion in assets invested in AI infrastructure plays, ranging from chipmakers that train AI models to power companies, up from 59% a year ago. That’s “where the revenues are right now,\u201d said Jay Jacobs, BlackRock’s U.S. head of \u200bequity \u200bETFs.<\/p>\n
Healthy returns from holdings like Fabrinet and Monolithic Power Systems have boosted the fund’s returns to 3.2% this \u200byear. The BlackRock fund has pulled in $7.9 billion in new capital over \u200cthe last 12 months, according to data from VettaFi.<\/p>\n
Two infrastructure ETFs launched this month alone. Impax Asset Management converted one of its mutual funds into the Impax Global Infrastructure ETF, while alternatives manager Harrison Street Asset Management launched an AI-related ETF focusing on electrification.<\/p>\n
“Securing reliable power sources is one of the biggest constraints in moving forward with all the AI data centers needed,” said Robert Becker, chief investment strategist at Harrison Street.<\/p>\n
Ed Farrington, Impax’s president of North America operations, said infrastructure was a way to diversify overall equity portfolios as well as what has for years been a highly concentrated trade.<\/p>\n
“STEALTH” AI PLAYS<\/p>\n
To be sure, the Magnificent Seven hyperscalers have delivered consistently strong revenues, but investors say that is mostly thanks to their core businesses, which are \u200cfunding AI capital expenditures. That spending will be around $630 billion this year alone.<\/p>\n
The quest to identify underpriced infrastructure \u200bcompanies set to benefit is leading some investors to niche corners of the market.<\/p>\n
Ari Sass, president and portfolio \u200bmanager of M.D. Sass Investor Services, said companies he once thought of as \u201cstealth” AI \u200bplays are moving into the spotlight, such as companies helping to deliver the tremendous amount of energy needed to power semiconductor fabrication plants and data \u200ccenters.<\/p>\n
Quanta Services , which provides construction and maintenance services for electric utilities, is \u200bup 24.17% so far this year, for example.<\/p>\n
The \u200bTortoise AI Infrastructure ETF launched in October, meanwhile, invests in companies like century-old Wisconsin-based Modine Manufacturing which started out manufacturing radiators for farm equipment and has since pivoted to providing data center cooling systems. Its shares are up 19.25% so far this year.<\/p>\n
As more investors pile into the AI infrastructure trade, some are sounding warnings. They point \u200bto the fiber optic network companies that collapsed after over-investing to \u200csupport Internet firms in the 1990s as a cautionary tale.<\/p>\n
“It looks as if the spending on AI buildout is coming from financially stronger companies, but at the \u200bsame time, valuations for anything with AI exposure are getting a bit rich,” said Michael Reynolds, vice president of investment strategy at Glenmede. “Everyone needs to exercise \u200bsome caution.”<\/p>\n
(Reporting by Suzanne McGee in Providence, Rhode Island, editing by Michelle Price and Deepa Babington)<\/p>\n","protected":false},"excerpt":{"rendered":"By Suzanne McGee PROVIDENCE, Rhode Island, Feb 19 (Reuters) – As Wall Street’s love affair with artificial intelligence…\n","protected":false},"author":2,"featured_media":478585,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45],"tags":[182,30441,181,507,12295,17685,52119,221192,221191,7264,160,11748,880,95594,74],"class_list":{"0":"post-478584","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-ai-revolution","10":"tag-artificial-intelligence","11":"tag-artificialintelligence","12":"tag-blackrock","13":"tag-data-center","14":"tag-data-storage","15":"tag-harrison-street-asset-management","16":"tag-impax-asset-management","17":"tag-infrastructure","18":"tag-investors","19":"tag-providence","20":"tag-rhode-island","21":"tag-spending-spree","22":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/478584","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=478584"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/478584\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/478585"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=478584"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=478584"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=478584"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}