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Most investors think the AI boom is about buying semiconductor companies. That was true in 2023 and 2024. Going into 2026, the bottleneck is increasingly becoming physical infrastructure.

A single large AI data center can consume as much electricity as a small city. Building these facilities requires enormous amounts of copper, steel, aluminum, transformers, cooling equipment and transmission infrastructure. Copper is particularly important because it is used in power distribution, networking equipment, transformers and cooling systems.

The International Energy Agency has repeatedly warned that global copper demand is expected to outpace supply growth over the coming decade. Major mining companies have also highlighted that new copper discoveries are becoming rarer and more expensive.

This is where XBM becomes interesting.

Instead of trying to pick the next copper winner, XBM owns many of the world's largest diversified mining companies. Companies such as BHP Group, Rio Tinto and Freeport-McMoRan are not speculative miners. They are some of the largest producers of copper and industrial metals globally.

What makes XBM attractive is that you are not betting on one mine or one country. You are betting on a structural shortage of industrial metals that may emerge as AI infrastructure, EV adoption and grid modernization all compete for the same resources.

The risk is obvious. Mining stocks are cyclical. If global growth slows or China enters a prolonged slowdown, metal prices can drop sharply and these stocks can underperform for years. Investors need patience.

My investment thesis is that AI data centers, electrification and energy transition projects are likely to create a decade-long demand tailwind for industrial metals. If that thesis is correct, XBM may be one of the most overlooked AI-related investments available to Canadian investors.

For a TFSA investor, XBM offers potentially tax-free capital gains from a theme that could remain relevant well into the 2030s.

If someone had asked in 2023 what AI needed most, the answer would have been GPUs.

If you ask the same question in 2026, the answer may increasingly be electricity.

Major AI operators are now openly discussing power constraints. Data center operators are signing long-term power agreements and utilities across North America are revising electricity demand forecasts upward because of AI workloads.

The average ChatGPT query uses many times more computing resources than a traditional internet search. Multiply that by billions of AI interactions and the electricity requirement becomes enormous.

ZAP is essentially a bet on that reality.

Rather than owning technology companies directly, it owns the businesses that make electrification possible. These include utility companies, transmission infrastructure firms, grid modernization companies and electrical equipment providers.

What makes this ETF compelling is that it benefits from multiple trends simultaneously.

Even if AI adoption slows, electrification of transportation continues.

Even if EV growth slows, power-grid modernization continues.

Even if grid spending pauses, industrial reshoring in North America continues.

In other words, several independent trends support the same investment thesis.

Historically, infrastructure investing has been less glamorous than technology investing. Yet many of the largest fortunes during industrial revolutions were made by those who owned the infrastructure rather than the end product.

The risk is that ZAP is a relatively young ETF. It does not yet have the long performance history of established funds. Investors are therefore relying more heavily on the underlying theme than on historical returns.

If AI spending continues growing at its current pace, I believe this ETF has the highest upside potential among the three because it sits directly at the intersection of AI, power demand and infrastructure investment.

For growth-oriented TFSA investors, this would be my most aggressive long-term position.

XMD is the least exciting ETF on this list.

That is exactly why I like it.

Most investors focus on Canada's biggest companies. They buy the banks, railways and energy giants that dominate the TSX.

The problem is that large companies often grow slowly because they are already enormous.

XMD focuses on Canadian mid-cap companies. These businesses are generally past the startup stage but still have significant room to expand.

Historically, mid-caps have often delivered higher long-term returns than large caps because they occupy a sweet spot between stability and growth.

Many future large-cap winners begin their journey as mid-caps.

Some get acquired at substantial premiums.

Others grow into national champions.

What investors often overlook is that mid-cap companies tend to be under-followed compared to Canada's banking giants. This creates opportunities for market inefficiencies.

XMD is essentially a diversified basket of these emerging businesses.

Unlike XBM, it is not dependent on commodity prices.

Unlike ZAP, it is not dependent on a single megatrend.

Instead, it gives exposure to the broader growth of the Canadian economy.

The downside is that mid-cap stocks tend to be more volatile during recessions. They usually have less access to capital and fewer resources than large corporations.

However, for investors with a 10- to 20-year horizon, this volatility can actually be beneficial because it creates opportunities to accumulate shares at lower valuations.

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If I had to rank them strictly for the next decade:

#1 XBM because copper and industrial metals are the foundation of AI infrastructure.

#2 ZAP because electricity demand could become the defining investment theme of the AI era.

#3 XMD because every portfolio needs a broad growth engine that is not dependent on one macro theme.

My preferred allocation would be approximately:

This portfolio is unusual because it does not own the obvious AI names. Instead, it owns the industries that make AI possible: metals, electricity and economic growth. Historically, the biggest long-term investment opportunities often emerge not from the technology itself, but from the infrastructure that supports it.

Disclaimer: The information provided on this website is for educational and informational purposes only and does not constitute financial, investment, or trading advice. Investing in securities involves risk, including the potential loss of principal; always conduct your own research and consult a qualified financial professional before making investment decisions.