AI in Focus: Why Some Commodities are Having a Material(s) Impact
Author: John Kratochwil
August 6, 2026
Artificial intelligence (AI) has been the dominant theme in equity markets throughout 2026. Investors have largely focused on the hyper-scalers and their enormous investments in AI infrastructure. Yet large-cap technology is only part of the story as AI is reshaping industries across sectors.
This edition of AI in Focus puts materials in the spotlight.
AI isn’t just a software revolution – it’s also an infrastructure revolution. This is an exciting proposition for investors because those tend to last longer, require more capital, and create more winners than initially anticipated.
Every data centre requires power infrastructure, electrical equipment, cooling systems, and vast quantities of raw materials. Copper, aluminum, and steel are used to build the actual facilities, while specialty chemicals are needed for semiconductor materials, cooling fluids, refrigerants, and other electronic components.
This buildout of data centres will ignite a new spending cycle for copper and copper-exposed businesses, plus companies that produce the construction materials and chemicals enabling next-generation technology. The first half of 2026 illustrated as structural bottlenecks created winners across the materials landscape:
- Supply constraints drove copper prices higher
- Gold prices rose early in the year amid geopolitical turbulence
- Steel and aluminum benefited from disruptions as a result of issues in the Middle East
While yes, AI implementation stands to improve operational efficiency within the sector and drive some degree of margin expansion, the more important takeaway is that artificial intelligence is more physical than initially assumed.
So how should we be evaluating companies within this transformative context? Classic metrics like production growth, unit costs, and operating leverage still matter, but new questions are becoming increasingly relevant:
- Does the company own a bottleneck asset?
- Is the company’s product of strategic importance?
- What is the jurisdictional risk associated with where the company operates?
The market is favoring companies that can make money today rather than just promise future earnings. Net present value remains an important framework for assessing long-term projects, but there is growing emphasis on free cash flow generation.
When taken altogether, it is becoming increasingly clear that many materials companies are evolving into strategic assets rather than just vehicles for commodity exposure. This shift is being driven largely by a scarcity that could persist for years to come.
For investors, this means that the worthwhile investment opportunities aren’t just in the companies building the models, hardware, and software, but also in those laying the physical groundwork that makes this whole buildout possible.
The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.
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Written by
John Kratochwil, MBA, P.Eng.
Senior Analyst
AGF Investments Inc.
