While gold and silver have historically commanded the spotlight during commodities rallies, offering investors solid inflation hedges, copper has been outshining both these precious metals in the era of artificial intelligence (AI). Driven by unprecedented industrial demand, the S&P GSCI Copper index has surged by an impressive 11% year to date, outpacing the S&P GSCI Silver index’s rally of nearly 7% as well as the S&P GSCI Gold index’s rise of 4%.
This price appreciation trend puts the spotlight on copper exchange-traded funds (ETFs), as investors recognize that AI’s physical infrastructure buildout requires a massive backbone of conductive metals.
Before identifying these ETFs, one must understand why this red metal is dominating Wall Street by exploring how deeply copper is embedded in the physical architecture of the AI revolution and analyzing its long-term market outlook.
The Red Metal’s Dominance in the AI Buildout
Copper is the irreplaceable baseline infrastructure for AI data centers. AI servers require three to five times more power than traditional data servers, necessitating massive usage of the red metal required for incredibly dense electrical grids, advanced power distribution units and massive cooling systems.
As a result, while a conventional data center uses 5,000 to 15,000 tons of copper, hyperscale AI data centers can require up to 50,000 tons of copper per facility, as per data from the Copper Development Association.
While silver is the most electrically conductive metal on earth, its high price makes it too expensive for mass wiring, whereas copper offers 97% of silver’s conductivity at a fraction of the cost. On the other hand, the enormous demand for electricity required by power-hungry data centers requires the installation of high-voltage cables, wherein gold simply cannot be used due to its high electrical resistance.
Consequently, copper has emerged as the most cost-effective, viable metal for bulk use in AI data center buildout, showing its prowess over gold and silver in the metal industry.
Will Copper Continue to Outshine?
The future outlook for the copper industry remains exceptionally bullish as businesses globally are rapidly accelerating their AI integrations. Recent projections justify this theory.
Notably, S&P Global expects copper demand for data centers to increase from 1.1 million metric tons in 2025 to 2.5 million metric tons by 2040, with AI training data center-related copper demand accounting for 58% of total copper demand in data centers by 2030.
Compounding this demand explosion is a severe structural supply crunch, with major global mines facing declining ore grades and prolonged regulatory delays for new projects. This demand-supply imbalance, as predicted by many commodity analysts, paves a clear pathway for sustained high copper prices over the next several years.
In contrast, gold demand from tech is expected to be relatively stable (around 320-325 tons annually), while silver’s industrial use is spread across AI-centric data centers, solar panels and electric vehicles.
Meanwhile, silver is also witnessing a tight supply market, with it being widely used for high-speed connectors and chip packaging in AI training servers. However, because silver’s AI footprint is concentrated in these micro-components rather than massive physical wiring, copper may continue to maintain its prowess in terms of absolute bulk tonnage demand.
For investors, this ensures that while silver remains a critical high-performance asset, copper captures the primary macro-economic crown for raw AI infrastructure expansion.
Copper ETFs in Spotlight
Considering the aforementioned discussion, investors seeking exposure to copper’s boom without managing physical commodities or single-stock mining risks may consider adding the following copper ETFs to their watchlist:
Global X Copper Miners ETF COPX
This fund, with assets worth $8.14 billion, provides exposure to 41 copper mining companies. COPX has surged 25.4% year to date.
The fund charges 65 basis points (bps) as fees. It traded at a good volume of 4.06 million shares in the last trading session.
United States Copper Index Fund CPER
This fund, with assets worth $832.8 million, seeks to track the daily performance of the SummerHaven Copper Index Total Return. CPER has soared 14.3% year to date.
The fund charges 106 bps as fees. It traded at a volume of 0.55 million shares in the last trading session.
iShares Copper and Metals Mining ETF ICOP
This fund, with net assets worth $480.8 million, provides exposure to 45 global copper and metal ore miners. ICOP has gained 26.6% year to date. Anglo American holds the first position in this fund, with 8.90% weightage.
The fund charges 47 bps as fees. It traded at a volume of 0.12 million shares in the last trading session.
Sprott Copper Miners ETF COPP
This fund, with net assets worth $326.3 million, provides exposure to 61 global securities in the copper industry, including copper producers, developers, and explorers, and physical copper. COPP has rallied 25.3% year to date. FreeportMcMoRan holds the first position in this fund, with 25.69% weightage.
The fund charges 65 bps as fees. It traded at a volume of 0.21 million shares in the last trading session.
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Global X Copper Miners ETF (COPX): ETF Research Reports
iShares Copper and Metals Mining ETF (ICOP): ETF Research Reports
Sprott Copper Miners ETF (COPP): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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