Artificial intelligence (AI) has been fueling the surge in Nvidia Corp (NVDA  ) stock, in addition to many other semiconductor companies, since 2023.

With its growing relevance and use cases, AI is also fueling global copper demand.

The demand for copper - an essential component in powering the digital revolution - is surging. Dominic O'Kane, an analyst at JPMorgan, sheds light on this burgeoning trend.

O'Kane revealed its implications for both supply and investment opportunities within the copper market.

The exponential growth of AI computing capacity in the coming decade coincides with the amount of copper required to support this growth.

It's estimated that 1MW of datacenter power capacity could necessitate anywhere between 20 to 40 tons of copper. This projection underscores the significant demand AI is placing on copper resources.

The International Energy Agency (IEA) forecasts a base case scenario of 15% CAGR in global datacenter power demand until 2026.

Top Stock Picks - Copper

In light of these projections, O'Kane identifies three top regional copper picks - Anglo American (EMEA), Teck-Resources (North America), and Sandfire (Australia). These companies are strategically positioned to capitalize on the increasing demand for copper.

  • Anglo American PLC (AAUKF  ) (NGLOY  ), with its operations primarily based in Europe, the Middle East, and Africa (EMEA), offers significant upside potential despite providing only 20-25% earnings exposure to copper.
  • Teck-Resources Ltd. (TECK  ), operating primarily in North America, stands out as a top pick due to its promising growth prospects, including the ramp-up of its QB2 project and potential new project sanctions.
  • Sandfire Resources Ltd (SFRRF  ), based in Australia, emerges as an attractive investment opportunity with its focus on copper production and a market capitalization of just US$2.6 billion.
Implications for Supply and Investment: The AI-driven surge in copper demand presents both challenges and opportunities for investors and the mining industry. O'Kane's analysis underscores the importance of considering multi-sector, cross-asset, and environmental, social, and governance (ESG) factors in investment decisions.

Moreover, the consolidation in the global mining sector, highlights the strategic significance of companies like Anglo American, Teck-Resources, and Sandfire in meeting the growing demand for copper.