The dominant investment theme is shifting. For two decades, capital favored intangible assets like fintech and cloud computing. Now, investors are rotating into 'real things' with significant supply constraints, representing a complete reversal of the prevailing trend.
Related Insights
The tech business model has fundamentally changed. It has moved from the early Google model—a high-margin, low-CapEx "infinite money glitch"—to the current AI paradigm, which requires a capital-intensive, debt-financed infrastructure buildout resembling heavy industries like oil and gas.
Hyperscalers are selling their own securities (stocks, bonds) to fund a massive CapEx cycle in physical infrastructure. The most direct trade is to mirror their actions: sell their securities and buy what they are buying—the raw materials and commodities needed for data centers, where the real bottlenecks now lie.
AI's ability to generate software at near-zero marginal cost is erasing the scarcity premium that propelled software stocks for over a decade. This realization is causing a massive capital rotation out of software ETFs and into tangible, scarce assets like metals and commodities.
After a decade of abundant "growth capex" building new infrastructure, the economic pendulum is swinging towards "maintenance capex." This creates a massive, overlooked opportunity for technologies that service existing assets, like predictive software, acoustic sensors, and remote repair robots.
Long-term returns are a function of capital supply and demand. Hyped areas like AI have a surplus of capital, competing returns down. True opportunities lie in being the "one banker for 1,000 borrowers"—investing in areas starved for capital, where your money commands a higher expected return.
The world is moving away from an era of financial abstractions, where a digital entry was trusted as much as a real asset. As global trust breaks down, nations are prioritizing physical reality—commodities, manufacturing, and energy—over promises. You can't build a drone with a digital hedge or eat a futures contract.
For 20 years, pension funds and endowments shunned investment in mining and resources due to political and social pressures. Now, a confluence of geopolitical necessity and reshoring is creating a demand shock that institutional capital is unprepared for, forcing them to chase a supply-constrained sector and exacerbating the rally.
The current commodity supercycle is intensified because traditionally asset-light tech companies (hyperscalers) are now massive consumers of physical resources. They are building data centers and competing for materials like copper, fundamentally altering their business models and commodity demand.
The 50-year supremacy of asset-light software may be an anomaly. If AI makes software creation nearly free, economic value will shift back to the historical mean: tangible assets like infrastructure, energy, and regulated, liability-bearing businesses that touch the physical world.
As the "con game" of global fiat currency dilution becomes undeniable, a secular shift is underway. Capital is rotating out of traditional financial assets and into long-neglected hard assets like precious metals and crypto. This creates a structural short squeeze on sectors with tight supply, like gold miners.
