Artificial Intelligence: A “Picks and Shovels” Infrastructure Strategy

Overview

This case study focuses on an AI investment strategy centred on the “picks and shovels” approach - targeting the infrastructure and inputs required to build and scale artificial intelligence systems. Rather than only investing in end-user AI applications, the strategy captures value from the significant capital expenditure being deployed globally into AI infrastructure.

Key Transaction Details

• Sector: Artificial Intelligence (Infrastructure & Enablers)
• Strategy Type: Thematic Equity (Global Long Exposure)
• Investment Horizon: Multi-year (5–10 years)
• Core Focus: Semiconductors, data infrastructure, power generation, hardware supply chain

Context

Artificial intelligence represents one of the largest capital investment cycles in modern history. Major global technology companies are deploying unprecedented levels of capital into building AI capability, spanning data centres, semiconductors, and the broader supporting infrastructure.

This surge in investment is being driven by the race to develop and scale AI systems, resulting in significant and sustained capital expenditure across the entire value chain. While the ultimate winners at the application level remain uncertain, the scale of infrastructure build-out is clear and ongoing.

This environment closely resembles historical investment booms - such as the railroad expansion, where the most consistent and reliable returns were generated not by those building end applications, but by those supplying the essential tools and infrastructure underpinning the growth.

Investment Opportunity

The “picks and shovels” strategy targets the foundational layers of AI development:

• Semiconductors: Memory and processing chips critical for AI workloads
• Hardware supply chain: Equipment and components required for manufacturing and deployment
• Energy & power: Electricity generation and infrastructure needed to support data centres
• Global exposure: Investments across key regions including the US, Korea, Taiwan, and Australia

Key strategic principles include:

• CapEx capture: Positioning to benefit directly from large-scale infrastructure spending
• Multiplier effect: Recognising that each dollar of AI investment generates broader economic activity
• Diversification: Exposure across multiple layers of the AI value chain
• Avoiding binary risk: Reducing reliance on uncertain end-user applications

Outcome

The AI infrastructure thematic has delivered strong results:

• Consistent performance: Key holdings in semiconductor and infrastructure segments have performed strongly
• Global opportunity capture: Exposure to leading international markets driving AI development
• Scalable returns: Participation in a multi-year capital investment cycle
• Portfolio resilience: Reduced exposure to uncertain application-layer outcomes

Conclusion

The AI “picks and shovels” strategy highlights the value of investing in foundational infrastructure during periods of technological transformation. By focusing on where capital is being deployed, rather than predicting end winners; the approach provides a more stable pathway to capturing growth. With AI investment expected to remain elevated for years, this thematic offers a compelling long-term opportunity aligned with structural global trends.