AI Boom Can Lead To 'Potential Demand Growth' For This Metal, Wall Street Turns Bullish

Wall Street is demonstrating an increased interest in copper, a trend driven by the metal’s growing use in data centers, which are essential for artificial intelligence (AI) operations.

What Happened: A note from Jefferies, predicts that global copper demand from data centers will jump from 239 thousand tons in 2023 to at least 450 thousand tons annually by 2030, reported CNBC.

“Our analysis shows that this potential demand growth will exacerbate an underlying copper market deficit, ultimately leading to higher prices,” Jefferies analysts stated.

Additionally, Morgan Stanley forecasts that copper prices will hit $10,500 per ton by the end of this year, a 12% increase. This prediction is based on the rising demand for copper in AI and data center operations, along with a limited supply.

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The report suggests that investors interested in this sector consider stocks in the Global X Copper Miners ETF COPX, particularly those of Canadian firm Solaris Resources SLSSF, which shows over 200% potential upside and a 100% buy rating.

Filo Mining FLMMF has also garnered attention, receiving a 25% upside potential from analysts along with an impressive 92% buy rating. For those interested in investing in this sector through exchange-traded funds (ETFs), options include the Global X Copper Miners ETF, the Sprott Copper Miners ETF COPP, and the iShares Copper and Metals Mining ETF ICOP.

Why It Matters: The surge in copper demand is closely tied to the AI boom. Goldman Sachs predicted a 15% rise in the S&P 500 by the end of 2024, driven by the exceptional performance of tech stocks, particularly those in the AI sector.

Furthermore, IQE, a supplier to Apple, projected strong fiscal 2024 results, buoyed by a robust order book due to the rapid expansion of the AI sector.

However, the AI boom has not been without its critics. Demis Hassabis, co-founder of Google DeepMind, expressed concerns that the surge in AI funding is leading to exaggerated hype, overshadowing actual scientific progress in the sector.

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