Wall Street is showing increased interest in copper, a trend fueled by the metal's growing use in data centers, which are essential for artificial intelligence (AI) operations.
What happened: A note from Jefferiespredicts that global demand for copper from data centers will increase from 239 thousand tons in 2023 to at least 450 thousand tons annually by 2030. reported CNBC.
“Our analysis shows that this potential demand growth will exacerbate an underlying deficit in the copper market, ultimately leading to higher prices,” Jefferies analysts said.
Besides, Morgan Stanley It forecasts that copper prices will reach $10,500 per ton by the end of this year, an increase of 12%. This prediction is based on growing demand for copper in data center and AI operations, along with limited supply.
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The report suggests that investors interested in this sector consider the shares of the Global X Copper Miners ETF COPXparticularly those of the Canadian firm Solaris Resources SLSSFshowing over 200% upside potential and a 100% Buy rating.
Edge Mining FLMMF It has also attracted attention, receiving a 25% upside potential from analysts along with an impressive 92% Buy rating. For those interested in investing in this sector through exchange-traded funds (ETFs), options include the Global Sprott Copper Miners ETF COPPand the iShares Copper and Metals Mining ETF ICOP.
Because it is important: The increase in copper demand is closely related to the rise of AI. Goldman Sachs predicted a 15% rise in the S&P 500 by the end of 2024, driven by the exceptional performance of technology stocks, particularly those in the artificial intelligence sector.
Besides, intelligence quotientprovider Appleprojected strong fiscal results for 2024, driven by a strong order book due to the rapid expansion of the AI sector.
However, the rise of AI has not been without criticism. Demis Hassabisco-founder of Google DeepMindexpressed concern that the increase in AI funding is leading to hype, overshadowing real scientific progress in the sector.
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Kaustubh Bagalkote
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