Most people associate AI investing with semiconductors like Nvidia Corp. (NASDAQ:NVDA) or cloud giants like Microsoft Corp. (NYSE:MSFT). But beneath the surface, there's a less obvious story: the immense power required to support this innovation.
As U.S. power demand is projected to surge at an annual rate of 2.5%, a $7 trillion investment windfall is on the horizon fueled by the sweeping infrastructure overhaul required to sustain AI breakthroughs, digital asset mining, and next-generation mobility innovations.
In an exclusive interview with Benzinga on Thursday, Maurits Pot, CEO and co-founder of Tema ETFs, introduced the newly launched Tema Electrification ETF (NYSE:VOLT), the world's first fund dedicated to the infrastructure powering modern technology.
Why Power Demand Is Surging
The U.S. power grid has been largely neglected for decades, but the electrification era is creating a surge in electricity consumption that hasn't been seen since the 1990s.
Several megatrends are at play:
- AI is energy-hungry: AI data centers consume seven times more power than traditional facilities, according to Tema ETFs. With generative AI and machine learning applications proliferating, power requirements are expected to soar.
- Aging infrastructure: Approximately 70% of U.S. transmission and distribution (T&D) lines are over 25 years old—past their recommended lifespan. Without upgrades, the grid may be unable to meet demand.
- Supply deficits are coming: The U.S. could face a 40 gigawatt power shortfall by 2030, equivalent to 40 nuclear plants or 100 gas-fired turbines.
“We think this electrification trend is massive,” Pot said, adding, “the opportunity lies on the expansion of power capacity needed to meet rising demand for AI, mobility and other things.”
What Sets VOLT Apart?
Pot explained that VOLT is the first ETF to span the full electrification value chain, offering exposure to companies across five categories: generation, transmission, grid equipment, electrification services, and applications.
Here's a closer look at some of the key names in the portfolio:
| Category | Portfolio Holding | Investment Rationale |
|---|---|---|
| Generation | GE Vernova Inc. (NYSE:GEV) | The U.S.'s largest manufacturer of gas turbines is sold out until 2028. |
| Transmission | Nexans | Supplies high-voltage cables to modernize aging T&D lines in the U.S. |
| Grid Equipment | Hubbell Inc. (NYSE:HUBB) | Builds critical electrical grid infrastructure expected to grow at 2x GDP. |
| Electrification Services | Quanta Services Inc. (NYSE:PWR) | Modernizes grid networks and connects new energy sources to the system. |
| Applications | Vertiv Holdings LLC (NYSE:VRT) | Produces data center cooling systems, with the market growing 13–15% annually. |
Bitcoin, Crypto And the Hidden Digital Asset Demand Story
According to Pot, the growth of the digital asset industry is an underrated source of upside risks to U.S. power demand needs in the upcoming years.
“Bitcoin (CRYPTO: BTC) mining is very energy intensive,” Pot stated.
Current VOLT Portfolio Positioning
Here's a breakdown of the fund's current portfolio positioning as of Dec. 4, 2024:
Regional Exposure:
North America dominates the portfolio with 80.91% allocation, while Europe accounts for 16.57% of the exposure.
Market Cap Breakdown:
The portfolio focuses on large-cap companies, which comprise 64.80% of the holdings, followed by mid-cap companies at 24.54%. Small-cap stocks represent 8.14% of the fund. There are no mega-cap stocks, defined as those with a market capitalization of over $200 billion.
Power Allocation:
- Power Generation accounts for 23.55%, split into conventional energy at 12.85% and renewables at 10.70%.
- Grid Management is the largest allocation at 44.39%, including 24.53% for “before the meter” infrastructure and 19.86% for “after the meter” services.
- End-Use Applications make up 29.54%, further divided into 13.15% for products and 16.39% for services.
Top 10 Holdings
| Company | % of NAV |
|---|---|
| Bel Fuse, Inc. (NASDAQ:BELB) | 5.10% |
| Nexans SA | 5.08% |
| GE Vernova, Inc. | 5.03% |
| Hubbell, Inc. | 5.01% |
| Quanta Services, Inc. | 4.88% |
| Powell Industries, Inc. (NASDAQ:POWL) | 4.15% |
| Vertiv Holdings Co. (NYSE:VRT) | 4.09% |
| ABB Ltd. (NYSE:ABB) | 4.05% |
| Schneider Electric SE (EPA: SU) | 4.04% |
| Eaton Corp. PLC (NYSE:ETN) | 4.03% |
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Image created using artificial intelligence via Midjourney.
