Commodities are entering a new structural phase defined by scarcity, geopolitics and surging demand for the metals underpinning AI, electrification and defence. Yet financial markets remain largely unprepared for the physical supply constraints required to build it — creating a compelling opportunity: critical metals offer both return potential and a natural hedge to AI risk.
Commodities are entering a powerful new phase defined by scarcity, geopolitics and structural demand.
Metals: The metals underpinning Artificial Intelligence (AI) infrastructure, electrification and defense—such as copper, aluminium and rare earths—are concentrated in a handful of regions, while global supply chains run through fragile chokepoints such as Strait of Hormuz and Strait of Malacca. At the same time, new supply faces declining ore grades, long permitting cycles and rising capital intensity.
China dominates key parts of the critical‑minerals chain—over 90% of rare‑earth refining, around 70% of lithium refining, and roughly 45% of copper refining – all critical to AI hardware, infrastructure or electrification. Then add in logistics. Global flows of energy, metals, and components are funneled through a handful of vulnerable chokepoints, ports and shipping lanes—all now increasingly exposed to geopolitical disruption.
- Financial Markets are pricing the upside from AI adoption, but they are far less prepared for the physical constraints required to build it. That creates a compelling opportunity: exposure to critical commodities can both capture supply-driven returns and provide a natural hedge to AI risk if the physical inputs fail to keep pace with digital ambition. But accessing this opportunity requires a scarcity mindset.
- Traditional benchmarks overweight what is produced the most, not what is hardest to supply.
- Neuberger investment approach instead focuses on scarcity across a broader and more diversified opportunity set, actively positioning along futures curves and across commodities to capture the most powerful dislocations in global markets.
Past performance does not predict future returns.
Source: EIA, IEA, WoodMac, CRU, EIA, Center for Global Development, Goldman Sachs Global Investment Research. Data as of 2024.
DRC: Democratic Republic of Congo.
