By: Ken Hoffman Commodity Strategist, Red Cloud Securities
An estimated US$4 trillion will be spent on AI—what is the impact on metals?
The world has gone crazy for AI, and the amazing applications of this technology are truly astounding. However, what does it take to make AI work? It turns out that it takes electricity, and I mean a lot of electricity. How much? The new US$100 billion investment by Nvidia into OpenAI to build 10 gigawatts of AI infrastructure. How much is that? It is more electricity than New York City uses on its most demanding day of the year – that’s a lot of electricity! Now, add more than 5,400 data centers already built and the thousands to come and you are putting massive pressure on the grid. This is not only a USA issue as highlighted by the grid collapse in Iberia earlier this year; note that Spain is one of the biggest operators of data centers in Europe.
So, with the estimated $4 trillion being spent on new AI infrastructure, how will the global electricity grid hold up? It will need billions and billions of new electricity investments. What does that entail? Having large stores of electricity, via large banks of stationary storage, and redundancy and improvement of the grid. It will need new capacity of wind, solar, and nuclear, all with infrastructure, transformers, wires etc. All of this will need millions of tonnes of copper for batteries, wires, transformers. Lithium will get a huge boost from this demand – stationary storage is going through its second year of triple digit growth globally, and this may not slow down anytime soon.
he numbers are staggering, AI growth has sent the market cap of Nvidia to $4.3 trillion, and its estimated 2027 revenues to $276 billion, according to estimates compiled by Bloomberg. That is a 10x increase from 2023 revenues. Certainly the biggest supplier to the AI surge is Nvidia. But behind these massive increases is the building of a vast network of server farms, some so large they can consume up to 100,000 Mt of copper for use in wires, connectors, transformers, etc. To keep them running, there must be a massive pool of electricity – this will be constructed using the latest in stationary storage battery technologies. This was seen in just the first half of 2025, where Chinese production of LFP cells (Lithium iron phosphate), surged 83%, after a more than doubling in 2024. The main usage of LFP cells is stationary storage along with cells for vehicles.
The bottom line for markets in 2026 and beyond is that as long as the surge in AI and cryptocurrency needs for electricity persists, there will be a need for a historic build out and improvement of electrical grids, and for all forms of electricity, be it wind, solar, or nuclear. This tailwind should carry metals such as copper, lithium, uranium, and manganese to new heights as the build out commences. China’s announcement of both the world’s largest hydroelectric complex as well as a 2-year emergency 2.5 trillion Yuan investment in stationary storage over the next 2 years could be the opening move in this longer-term story.
