AI-electric appeal for underperforming infrastructure: ETF experts

Industrial and infrastructure stocks may soon share the spotlight with the artificial intelligence trade.

According to ETF Action’s Mike Atkins, there’s a bullish setup taking shape due to both policy and consumer trends. His prediction comes during a volatile month for Big Tech and AI stocks.

“You’re seeing kind of the old-school infrastructure, industrial products that have not done as well over the years,” the firm’s founding partner told CNBC’s “ETF Edge” this week. “But there’s a big drive… kind of away from globalization into this reshoring concept, and I think that has legs.”

Global X CEO Ryan O’Connor is also optimistic because the groups support the AI boom. His firm runs the Global X U.S. Infrastructure Development ETF (PAVE), which tracks companies involved in construction and industrial projects.

“Infrastructure is something that’s near and dear to our heart based off of PAVE, which is our largest ETF in the market,” said O’Connor in the same interview. “We think some of these reshoring efforts that you can get through some of these infrastructure places are an interesting one.”

The Global X’s infrastructure exchange-traded fund is up 16% so far this year, while the VanEck Semiconductor ETF (SMH), which includes AI bellwethers Nvidia, Taiwan Semiconductor and Broadcom, is up 42%, as of Friday’s close.

Both ETFs are lower so far this month — but Global X’s infrastructure ETF is performing better. Its top holdings, according to the firm’s website, are Howmet Aerospace, Quanta Services and Parker Hannifin.

Supporting the AI boom

He also sees electrification as a positive driver.

“All of the things that are going to be required for us to continue to support this AI boom, the electrification of the U.S. economy, is certainly one of them,” he said, noting the firm’s U.S. Electrification ETF (ZAP) gives investors exposure to them. The ETF is up almost 24% so far this year.

The Global X U.S. Electrification ETF is also performing a few percentage points better than the VanEck Semiconductor ETF for the month.