Artificial intelligence has fueled significant growth in tech stocks throughout the year, yet a less prominent exchange-traded fund concentrating on power infrastructure is steadily outperforming the general market, with analysts suggesting its most prosperous period might still be forthcoming.
TL;DR
- The Tema Electrification ETF (VOLT) is outperforming the S&P 500, up 33% this year.
- Experts at Ned Davis Research predict VOLT could outperform the S&P 500 by 20% by 2027.
- VOLT offers direct exposure to data center electrification, benefiting power infrastructure companies.
- AI growth significantly increases electricity demand, driving need for grid upgrades and infrastructure investment.
The Tema Electrification ETF (VOLT) has seen a 33% increase so far this year, substantially beating the S&P 500's approximately 17% rise during the same timeframe. Currently, according to Business Insider, Ned Davis Research analysts are suggesting the fund as a “overweight” investment, forecasting it might achieve around 20% superior performance compared to the S&P 500 by 2027.
The fund’s thesis centers on a straightforward premise: The AI boom requires enormous amounts of electricity, and the companies that generate, transmit, and support that power stand to benefit the most. Pat Tschosik, chief thematic strategist at Ned Davis Research, and analyst Philippe Mouls described VOLT as offering “the most direct diversified exposure to the data center electrification theme,” with substantial holdings in what they call “data center bellwethers”—companies positioned to benefit most from AI infrastructure build-out.
Powell Industries, NextEra Energy, and Bel Fuse are among the fund's leading investments. The ETF reported 29 holdings and $168.3 million in assets under management by October 31, according to Tema.
The rationale behind Ned Davis Research’s bullish stance rests on two primary factors. First, global electricity demand from data centers is expected to more than double to 945 terawatt hours by 2030 from 415 terawatt hours in 2024, according to projections from the International Energy Agency. In the U.S., energy demand is anticipated to grow at a 15% compounded annual rate through the end of the decade, with most of that demand coming from the commercial sector, which includes data centers.
Energy demands have transitioned from forecasts to actual needs. For example, OpenAI’s Stargate data center project will extend across several states, necessitating power levels comparable to those of large urban centers.
Furthermore, the United States' energy grid seems to require substantial improvements. The American Society of Civil Engineers rated U.S. Energy infrastructure a D+ in its 2025 report card, a decline from a C- grade in 2021. “We believe we are in a grid-upgrade super cycle driven by data center demand and aging infrastructure,” Tschosik and Mouls commented.
Major tech firms are boosting investments in AI infrastructure, even as questions arise about whether the returns will justify the significant expenses. Amazon, Meta, Microsoft, and Alphabet devoted a combined $113.4 billion capital expenditures for the third quarter of 2025, marking a 73% rise from the previous year. Their anticipated collective spending for 2025 nears $400 billion, tens of billions more than earlier predictions, with further increases expected in 2026. Expected to increase further
Certain investors and economists have voiced concerns, parallels to the dotcom bubble, about whether the significant expenditure on data centers and chips will yield the anticipated profits. Nevertheless, Federal Reserve Chair Jerome Powell recently pushed back dismissed these comparisons, pointing out that today's AI investments are supported by considerable profits and robust business frameworks, contrasting with the speculative undertakings of the late 1990s.
VOLT's extensive spending directly fuels consistent demand for the electrical equipment, utility, and energy infrastructure firms within its investment holdings. Whether the AI surge fully realizes its revolutionary potential or faces setbacks, the present situation is undeniable: Data centers need electricity, and the businesses providing it are seeing a significant increase in activity that experts predict will persist for an extended period.
For this story, Coins2Day generative AI assisted in creating a preliminary version, which an editor then reviewed for factual correctness prior to publication.