Is AI the new China? Three lessons for investors

Key arguments

• AI may be a macro shock on the scale of China's rise, not merely another tech cycle.
• Second-order beneficiaries span utilities, grid equipment, construction, commodities and water resilience.
• Copper supply constraints (declining mine productivity, limited exploration, permitting) could require higher prices to incentivise capex.
• Strategic competition may make AI investment more durable than a typical cycle, but valuation and timing still matter.

Corresponding source evidence

1. China’s industrialization also fueled a commodity supercycle and a prolonged bond bull market, as disinflation reduced the need for central banks to raise interest rates.
2. A single ChatGPT query, for example, requires roughly 10 times as much electricity as a Google search, while an agentic AI system can require up to 1,000 times more power than a single chatbot interaction.1 I think there is little question that AI will increase electricity consumption (Figure 2).
3. To meet even conservative assumptions for growth in AI infrastructure, miners may need to increase capital expenditures relative to operating expenditures (Figure 3).