Investing in the Physical Bottlenecks of Artificial Intelligence (AI)
Prepared July 23, 2-026 by LOTM/Tom Linzmeier
CIF System – Executive Summary
Artificial Intelligence is creating a once-in-a-generation infrastructure build-out. While most investors focus on semiconductor manufacturers and software companies, we believe the more durable opportunity lies in owning the physical assets that AI cannot operate without.
Every hyperscale data center requires:
• Reliable electricity
• High-voltage transmission
• Land suitable for development
• Cooling infrastructure
• Fiber connectivity
• Electrical equipment
• Engineering and construction expertise
These are not optional inputs. They are the bottlenecks that determine how quickly AI capacity can expand.
Investment Thesis
Our investment thesis is that companies supplying these scarce resources may experience sustained growth over the next two to four years as global AI infrastructure spending accelerates.
The market has largely priced in AI software and semiconductor leaders.
We believe the next phase of the AI investment cycle will increasingly reward companies building the physical infrastructure that enables AI deployment.
Unlike software, these assets are difficult to replicate because they require:
• Large capital investments
• Specialized engineering expertise
• Regulatory approvals
• Long development timelines
• Access to scarce resources
As AI demand grows, these barriers to entry may translate into durable pricing power and attractive long-term returns.
Why This Could Be Attractive (2026–2030)
Structural tailwinds:
• Hyperscale AI expansion
• Unprecedented electricity demand
• Grid modernization
• Robust data-center construction
• Government infrastructure support.
CIT System – Pros, Cons & chart of each ETF:
GRID – First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund ETF
Pros
- Direct exposure to grid modernization
- Strong AI electrification theme
- Unique focus compared with broad industrial ETFs
Cons
- Narrower mandate
- Can underperform when utility spending slows
SRVR – Pacer Data & Infrastructure Real Estate ETF
Pros
- Most direct exposure to data-center infrastructure
- Benefits from rising AI compute demand
- Includes digital infrastructure leaders
Cons
- Sensitive to interest rates through REIT exposure
- Valuations can become extended during AI enthusiasm
PAVE – Global X US Infrastructure Development ETF
Pros
- Diversified infrastructure exposure
- Includes engineering and electrical equipment companies
- Supported by long-term public and private infrastructure investment
Cons
- Broader mandate means less concentrated AI exposure
AIRR – First Trust RBA American Industrial Renaissance® ETF
Pros
- Strong industrial and manufacturing focus
- Benefits from AI-related capital spending and reshoring
- Higher growth profile than traditional infrastructure funds
Cons
- More cyclical than utilities or infrastructure REITs
- Greater sensitivity to economic slowdowns
IFRA – iShares US Infrastructure ETF
Pros
- Broad exposure to U.S. infrastructure
- Includes utilities, transportation, engineering, and construction
- Diversified risk profile
Cons
- Less pure AI exposure
- Performance influenced by sectors unrelated to AI
Bottom Line
Artificial intelligence is not solely a software story or semi-conductor story—it is an infrastructure story.
While many investors focus on the companies designing AI models or manufacturing chips, the next stage of value creation may increasingly accrue to the businesses supplying electricity, grid infrastructure, data centers, engineering, and industrial equipment.
A diversified basket of infrastructure-focused ETFs offers investors exposure to these long-duration themes while reducing single-company risk.
For investors with a two- to four-year investment horizon, we believe this group provides an attractive way to participate in one of the most important capital investment cycles of the coming decade.
As one can see in the charts above – this is not a wait an expectation story. The trend has momentum and is rising.
A suggested strategy is to decide the amount of money you want to allocate to this theme. Use the next six months to one year to invest equal dollar-cost-averaged amounts into this theme, be it one ETF or multiple ETFs. Make at least three equal investments over a spaced period. After you have an established position, be opportunistic and add to the position on weakness or harvest some profits when the price stretches above its 20-day or 50-day moving average. Use three years as a holding period goal.
Treat this process as if you are a Farmer. There is a time to plant, a time to let your crop grow/mature, and a time to harvest.
What is the Purpose of the CTF System:
CIF was designed to screen any industry for the best management, capital structure and balance sheets – and more that we do not wish to share, to place an investing edge into the hands of you the reader.
Instead of starting with one company, we screen the full industry universe, then use the Rapid CIF Screening Matrix to narrow it to the most promising candidates before building deep research on the top 3–5 names
The CIF System screen rewards quality and probability.
A deeper dive of our CIF System screens for “2030 Asymmetry Price Projection”. We seek 5X to 10X potential opportunities within a five-year or less timeline from “our” or “your” targeted industry sectors. This version is available but is behind a pay wall. Contact us by emailing LOTM.Millions @ gmail.com if interested in learning more about this service.
This report is intended to identify an emerging investment theme and present several vehicles through which investors may gain exposure. It is not intended to recommend a single security. Investors should evaluate each opportunity in the context of their own objectives, time horizon, and risk tolerance. The purpose of the CIF process is to encourage disciplined thinking.
LOTM Research & Consulting Service
* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
Please refer to our web site for full disclosure at www.LivingOffTheMarket.com ZTA Capital Group, Inc.
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