Key Points
- Investing directly in AI data centers may carry too much risk for some investors, but there are multiple other ways to benefit from the AI boom.
- “Picks-and-shovels” companies can expand from their existing businesses, helping reduce risk while still capturing strong AI-related returns.
- Investors have several potential winners to consider, including utilities, copper miners, and hyperscalers with diversified business models.
Canadian entrepreneur Kevin O’Leary, best known as one of “Shark Tank’s” celebrity investors, is embroiled in a controversial proposal for a $100 billion artificial intelligence (“AI”) data center in Utah that has left the state roiling. After being rammed through by political leadership in Utah’s Box Elder County, the recently approved 40,000-acre project is poised to rank among the world’s largest data centers, if completed.
Dubbed the Stratos Project, the O’Leary-backed data center still needs to negotiate a final development agreement over the next month or two, according to Business Insider. It also still needs to finalize the tax breaks that it’s expected to receive, and it doesn’t have a tenant yet, though O’Leary’s team is in “very early talks” with a few large tech companies, says Business Insider.
Even at this early date, concerns are also already mounting about when the data center might even be constructed. O’Leary’s company proposed a similar facility called Wonder Valley in Alberta, Canada, back in 2024. The project is already running two years behind schedule, according to the Deseret News.
Those are just some of the investment risks of newly constructed real estate, but AI data centers add additional levels of concern: public outrage and resistance, massive energy use that requires new sources, and the subsequent not-so-wonderful delays created by mixing all these issues together.
This creates serious business risk for investors in AI data centers.
With trillions of dollars flowing into AI, investors are rushing to make fortunes in the growing sector. While some investors focus on AI data centers, others are taking more indirect routes that still offer substantial gains with more manageable levels of risk.
When they think about AI investments, many investors immediately think of the obvious: AI data-center investments or the companies making popular generative AI models such as OpenAI or Anthropic. Those are some obvious beneficiaries of the AI megatrend. The expected upcoming IPOs of OpenAI and Anthropic would finally make those companies accessible to everyday investors.
Sometimes the best investment in a “gold rush” is to sell picks and shovels to the miners rather than doing the mining yourself. These kinds of pick-and-shovel plays can leapfrog off existing investments, reducing their risk, while still earning strong returns from the emerging megatrend.
Here are three better ways to play the AI boom than investing in AI data centers themselves.
3 Lower-Risk Ways to Invest in the AI Boom
While AI data centers may seem like “can’t lose” propositions, investors have a variety of ways to invest in the AI megatrend that offer a range of risk and reward. That’s something investors shouldn’t lose sight of: They don’t need to shoot for the moon to get moonshot-like returns. Many investors can still be winners by limiting their risk and playing the long game.
1. Utility Companies
O’Leary’s data-center project would use more electrical power than the whole state of Utah, according to reporting by the Salt Lake Tribune. The energy demand by AI data centers nationwide is driving a desperate need for more electricity.
Those AI data centers are putting a massive strain on existing electrical systems and requiring additional investment in electrical utilities, including expanding power generation capacity, developing additional transmission projects, and upgrading the grid. So, utilities are ready to spend hundreds of billions in the coming years to keep up with demand.
With huge investment in data centers set to last indefinitely, the “power grid upgrade” megatrend is poised to stick around for years, spinning off billions in profits for utilities investors alone.
Utilities are a lower-risk play than many other AI-riding investments, making them an attractive way to play the trend. They still benefit from the same drivers – the trillions set to flow into AI – and electrical energy usage that typically rises year after year, providing a recurring source of revenue.
Utilities also benefit from a regulatory environment that helps them lock in returns on their investments and raise prices over time. So, utilities can deliver lower-risk profits, which they then typically turn into a growing stream of outsized dividends.
Rather than analyzing and sorting through all the utilities stocks, investors can turn to the best energy exchange-traded funds (“ETFs”) for a stable stream of dividends and lower risk through the fund’s diversification.
2. Copper Miners
Copper has already surged to all-time highs this year, but the metal could be poised to move even higher in the decades to come. That’s because copper is so fundamental to the electrification of the world’s economy. It’s not only a play on trillions flowing into AI data centers, but also on massive investments in electric vehicles, and battery and charging tech.
So, copper diversifies the risk and reward across multiple megatrends. That’s on top of its existing base level of demand, such as for wiring and pipes, among other industrial applications.
While demand is strong, supply constraints are also supporting higher pricing for the metal. Firms have underinvested in copper for years, creating supply bottlenecks and driving prices higher.
For these reasons, Southern Copper (SCCO) has called copper “the best fundamental story in commodities” in a May 2025 investor presentation.
Investors can turn to copper miners such as Southern Copper or Freeport-McMoRan (FCX) to play the trend, but they should also consider the best copper ETFs, which may offer strong returns while diversifying the risks of holding just a few individual copper stocks.
With copper ETFs, investors can ride the metal’s performance without the dirty work of digging up individual winning stocks. This approach can make “trend-riding” much easier.
3. Hyperscalers
Rather than turn to investments in newly constructed AI data centers, investors can turn to well-established hyperscalers – the largest of the large data-center players. Hyperscalers include Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Meta Platforms (META).
Each of these companies has strong core franchises and is using cash flow to build out its own network of AI data centers. By owning any or all of these stocks, investors gain a strong core business with AI potential, diversifying the risk of a data-center-only focus.
The hyperscalers’ investments continue to rise quickly. Only months ago, the big four were estimating $650 billion in capital investment in 2026. The figure has since swollen to $725 billion, and Moody’s (MCO) thinks it could reach $785 billion, with $1 trillion in 2027.
These companies are not riskless either, of course. They’re borrowing tens of billions of dollars to support their investments, putting a drain on their cash flow today while they wait for AI to pay off. But this diversification adds a layer of defense from pure-play data-center exposure.
Investors Have Multiple Ways to Play AI
The takeaway for investors is to pick your spots when investing in AI. As investing legend Warren Buffett has long advised, “There are no called strikes in investing.” You get to buy the investments that fit your risk-and-reward tolerance.
For those seeking more direct exposure to AI data centers, however, consider the newly public Blackstone Digital Infrastructure Trust (BXDC). The company leverages Blackstone’s experience as a data-center investor to finance new data centers and will pay out a dividend. It’s an interesting new entrant that helps investors buy into the AI boom, too.
Regards,
James Royal, Ph.D.
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