Capital Ideas^™ 
Investment insights from Capital Group

Before AI’s boom came China’s massive industrial expansion. After joining the World Trade Organization in 2001, China poured roughly $20 trillion into factories, infrastructure and housing, creating one of the largest investment cycles in modern history. Today’s AI build-out is showing similar dynamics, with the potential to become even larger.

Capital Group economist Jared Franz estimates the AI build-out may require roughly $30 trillion in capital expenditures over the next decade. The current cycle also coincides with forces beyond AI, including electrification, defense spending and supply chain reconfiguration. China's initiative was primarily driven by industrialization and urban development. This cycle might prove more durable, fueled by strategic spending priorities less sensitive to economic fluctuations.

Although the two periods are not perfectly comparable, our investment professionals draw on lessons from what China’s boom can tell us about equity beneficiaries beyond the current AI leaders. In both cases, investors faced similar questions: How long could the investment cycle last, and when might returns justify the spending?

Shifting opportunities across the supply chain

China’s rapid growth followed an “S-curve,” with metal demand rising sharply and remaining elevated for longer than many expected. Growth from mining firms soon expanded to include equipment and tire manufacturers, explosives companies and dry bulk shippers. Emerging markets banks also benefited as regions including Brazil and Indonesia experienced economic growth from exposure to raw material exports.

In the case of AI, investors have understandably been focused on frontier large language models and makers of graphics processing units, but interest has broadened as rising demand exposes constraints across power, memory, networking and other semiconductor technologies.

As the AI build-out progresses, potential investment opportunities are increasingly appearing outside the U.S. TSMC remains one of the world's most important and advanced semiconductor manufacturers in a sector where leading-edge fabrication plants can take four to six years to build. Meanwhile, Korea's SK Hynix sits at the center of the memory build-out as a leading supplier of high-bandwidth memory. In our view, equity market developments in 2026, including volatility in Korean and Taiwanese stocks, reflect a shift in areas of profitability toward an Asian hardware perimeter.

On the financing front, ARM and Japan’s SoftBank are among the firms providing exposure to the central processing unit and model layer ecosystem. SoftBank offers financial and operational exposure across the AI build-out through its majority stake in ARM and direct investments in OpenAI, Stargate and neocloud businesses.

Copper as a case study 

Against the backdrop of a capex cycle beyond the AI build-out, copper offers one example. Also a key beneficiary of China’s commodity boom, the copper market is experiencing lessened supply and robust demand, creating scarcity in a critical input for AI infrastructure.

Copper prices are hovering near record highs, up roughly 64% since the start of 2025. Production, however, has seen little growth. This year, global copper supply may post its first annual decline since 2017. New mines are difficult to bring online due to permitting requirements, environmental considerations and stakeholder challenges. Developing a new mine can take 15 to 20 years from exploration to production.

Meanwhile, more governments are recognizing copper as a strategic resource and identifying vulnerabilities in their supply chains. Efforts to secure and diversify copper supplies may add further upward price pressure. China’s strengthening industrial economy continues to support demand, helping establish a higher floor for copper prices.

Grupo México, Ivanhoe Mines, Lundin Mining and First Quantum are among global copper producers sitting at the intersection of AI, power infrastructure, electrification and grid investment.

Concluding portfolio implications

History suggests that major investment booms are rarely as simple as picking a winner and holding on. China’s industrial expansion illustrates why. As growth accelerated, opportunities expanded beyond early market leaders to companies across regions, industries and the supply chain. One objective is to own irreplaceable core assets while identifying opportunities as new bottlenecks emerge. Staying invested through volatility and shifts may be the most important lesson.

Another key lesson from China’s boom is that familiar market indicators such as valuation weren’t always useful guides for equities. Commodity prices and currency movement played a crucial role in determining earnings and investment outcomes.

For allocators, these lessons reinforce the importance of looking beyond today's market leaders to where demand and growth may shift.