Reshoring and Infrastructure ETFs: The Next Wave Beyond AI Stocks?
Summary:
ETF experts identify industrial and infrastructure stocks as emerging contenders to complement AI-focused investments. Mike Atkins of ETF Action highlights policy-driven reshoring trends, while Global X CEO Ryan O’Connor emphasizes infrastructure’s critical role in supporting AI expansion through electrification and construction. The Global X U.S. Infrastructure Development ETF (PAVE) has gained 16% YTD despite recent tech volatility, outperforming semiconductor ETFs during June’s pullback. This shift reflects broader supply chain restructuring and physical infrastructure demands underlying digital transformation.
What This Means for You:
- Diversify beyond semiconductor ETFs: Consider infrastructure ETFs like PAVE or electrification funds (ZAP) to hedge against AI stock volatility
- Position for policy tailwinds: Capitalize on reshoring initiatives and $1.2 trillion U.S. infrastructure legislation through industrial exposure
- Focus on enabler companies: Target firms like Quanta Services (electrical grid specialists) and Howmet Aerospace (advanced materials) supporting AI’s physical requirements
- Monitor performance divergence: Infrastructure ETFs show relative strength during tech selloffs – watch for sustained outperformance
Original Post:
Industrial and infrastructure stocks may soon share the spotlight with the artificial intelligence trade according to ETF Action’s Mike Atkins, who cites policy shifts toward reshoring and domestic manufacturing. Global X CEO Ryan O’Connor notes infrastructure ETFs like PAVE (up 16% YTD) provide exposure to companies enabling AI expansion through electrification and construction. While the VanEck Semiconductor ETF (SMH) remains up 42% in 2024, June saw infrastructure investments outperform during tech sector volatility.
Key holdings in PAVE include Howmet Aerospace, Quanta Services, and Parker Hannifin – companies involved in materials, energy transmission, and industrial components. Global X’s electrification-focused ZAP ETF has surged 24% year-to-date, reflecting accelerated investment in power grid modernization required for data centers and AI processing facilities.
Extra Information:
• Bipartisan Infrastructure Law Breakdown (Government funding driving PAVE holdings)
• Reshoring Economic Analysis (McKinsey data supporting supply chain shifts)
• Global Electrification Trends (IEA report contextualizing ZAP ETF growth)
People Also Ask About:
- Why are infrastructure ETFs relevant now? Policy support and AI’s physical resource demands create structural tailwinds.
- How do PAVE returns compare to AI ETFs? PAVE shows lower volatility with 16% YTD gains versus SMH’s 42%.
- What companies benefit most from reshoring? Industrial materials suppliers and specialized construction firms.
- Does electrification impact AI growth? Yes – data centers require 10-50MW hourly, needing grid modernization.
Expert Opinion:
“The infrastructure trade isn’t competing with AI – it’s enabling it,” notes CNBC markets commentator Stephanie Link. “While semiconductors power algorithms, companies like Quanta Services build the physical and electrical frameworks allowing data centers to operate. This creates a multi-year investment cycle where industrial and tech growth become interdependent.”
Key Terms:
- Reshoring infrastructure investment ETFs
- Industrial ETF performance comparison
- Electrification ETF for AI support
- PAVE ETF holdings analysis
- Supply chain restructuring stocks
- Physical infrastructure enabling digital transformation
- Industrial materials for data center construction
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