The next major bottleneck for AI, electrification, and defense is not chips, but copper. To meet baseline GDP growth projections—excluding upside from data centers and green energy—the world needs to mine the same amount of copper in the next 18 years as it has in all of human history.

Daniel Gross's prescient question about copper being mispriced proved correct. The metal hit all-time highs due to AI's physical needs, with a single NVIDIA server rack containing two miles of copper wire. This highlights a critical, non-obvious bottleneck in the AI supply chain.

Companies like Tesla and AWS are investing in lithium and copper refining to control their supply chains, a new phase of vertical integration driven by AI's massive industrial needs for data centers and batteries.

The massive, concurrent AI build-out by large tech firms creates such inelastic demand for components like copper, gas turbines, and memory that their prices are soaring. This tech-specific investment is fueling broader inflation in industrial and hardware markets, a significant ripple effect of the AI boom.

The seemingly immaterial world of AI is entirely dependent on a vast physical system. Beyond electricity, AI's expansion drives demand for industrial commodities like copper and aluminum for grids, refined fuels for transport, and robust shipping infrastructure. This links digital growth directly to global commodities and logistics markets.

In an environment of supply chain shortages, investors should favor commodities essential for economic activity over monetary proxies like gold. Copper is critical for building data centers and its value is driven by real demand and scarcity, unlike gold's more abstract story.

AI is driving power demand at an unprecedented speed ("internet time"). However, building new power infrastructure takes decades ("geological time"). This massive mismatch creates a prolonged period of tight supply, making existing power assets incredibly valuable.

The rapid expansion promised by AI firms faces real-world bottlenecks. These include shortages of key commodities like copper, insufficient power grid capacity requiring years to build new plants, and a lack of skilled construction labor, making promised timelines highly unrealistic.

The major outage at the Grasberg mine, which supplies 3% of the world's copper, is turning a previously balanced market into a significant deficit for 2025 and 2026. This highlights supply chain fragility, as there were no existing surpluses to absorb the shock.