One trope I’m tired of when it comes to Artificial Intelligence (AI) ETFs is the “picks and shovels” analogy. In my opinion, that framing oversimplifies what’s actually happening. Instead, let’s look at the electrification theme – and the VistaShares Electrification Supercycle ETF (POW), writes Tony Dong, lead ETF analyst at ETF Central.
Sure, picks-and-shovels is intuitive — borrowed from the California Gold Rush, where the suppliers selling mining tools often profited more than the prospectors themselves. Some investors have stretched that to describe the AI boom, arguing that chipmakers are the picks-and-shovels. Everything downstream is just along for the ride.
VistaShares Electrification Supercycle ETF (POW)
Source: Yahoo Finance
But the reality is that AI’s value creation runs both vertically and horizontally, with feedback loops between infrastructure, hardware manufacturers, model developers, software platforms, and end users. Although there are a total of 19 thematic ETFs in ETF Central’s “AI and Big Data” segment, representing $11.8 billion in total assets, there’s far more variation than the picks-and-shovels metaphor suggests.
Case in point: AI runs on electricity, and lots of it. The International Energy Agency estimates that global data center electricity consumption now sits around 415 terawatt-hours per year, equal to about 1.5% of global demand. As AI workloads grow, that figure could more than double by the end of the decade.
For investors looking to capture this theme, POW takes an active approach I find refreshing. It focuses not on utilities or oil producers, but on the companies building, upgrading, and supplying the grid itself. Names include electrical component manufacturers, grid service providers, and engineering firms operating across the US, Europe, and Asia.
For investors who believe AI’s long-term growth depends on the grid catching up, I think POW offers a practical way to bet on that connection. The new ETF just started trading in late October.
