Copper demand to surge as $735 billion floods AI data centers

Copper is often called "Dr. Copper" for its reputation as a barometer of global economic health, and the Global X Copper Miners ETF has surged 37% over the past year. The metal's demand story is increasingly tied to the buildout of AI infrastructure. Hyperscalers are racing to build data centers, with major technology companies Alphabet, Amazon, Microsoft, and Meta Platforms spending $735 billion on capital expenditures this year, much of which is going toward data centers. According to McKinsey projections, data center investments could reach $7 trillion by 2030.

At the same time, the power grid must expand and upgrade aging infrastructure to meet growing electricity demand. According to an analysis by the Bank of America Institute, U.S. electricity demand is projected to grow 2.5% annually through 2035—five times faster than in the previous decade. Upgrading the power grid can take anywhere from four to 12 years, including installing new transmission lines, upgrading substations, and securing power. On the supply side, major copper producers in Chile and Peru face declining ore grades, and few major greenfield operations are scheduled to come online over the next few years. After the commodity crash in 2015, miners were penalized for cost overruns on megaprojects, and fewer greenfield projects followed.

The outcome hinges on whether new supply can arrive fast enough to meet demand from data centers and grid upgrades. Copper markets may find temporary relief in 2027 as brownfield mine expansions ramp up, elevated prices encourage scrap recycling, and softer construction activity in China tempers demand. But by 2028, structural supply constraints could become clear, and with few major greenfield mines coming online, copper deficits could grow and drive prices higher through the end of the decade, according to the article.