Infrastructure and Industrial ETFs Gain Traction as Reshoring and Electrification Bolster AI Supply Chain

Industrial and infrastructure equities, long overshadowed by the surge in artificial intelligence–related names, are beginning to attract renewed interest from exchange-traded fund strategists. Market observers point to U.S. reshoring initiatives and rising demand for electrification as catalysts that could lift these segments alongside, rather than in competition with, the high-profile semiconductor trade.

During a recent appearance on CNBC’s “ETF Edge,” Mike Atkins, founding partner at ETF Action, described a constructive backdrop for companies that build, equip and service domestic facilities. He highlighted a broader policy shift away from globalization toward production closer to end markets, a trend commonly referred to as reshoring. While many traditional industrial stocks have lagged the major technology benchmarks in recent years, Atkins argued that the policy environment now favors capital deployment in plants, transportation networks and energy systems located within the United States.

Ryan O’Connor, chief executive of Global X ETFs, struck a similar tone. O’Connor noted that infrastructure development directly supports the rapid build-out of data centers, chip fabrication plants and power distribution assets required to maintain the momentum behind artificial intelligence. Global X manages the U.S. Infrastructure Development ETF (ticker: PAVE), which tracks firms involved in construction services, heavy machinery and related industrial activities. According to O’Connor, the allocation fits naturally with efforts to onshore manufacturing capacity while upgrading national logistics and power grids.

Performance snapshot of key funds

The Global X U.S. Infrastructure Development ETF has climbed 16 percent year to date through Friday’s close. By comparison, the VanEck Semiconductor ETF (SMH) — a widely followed barometer for AI hardware exposure, containing positions in Nvidia, Taiwan Semiconductor Manufacturing and Broadcom — has surged 42 percent over the same period. Despite that sizeable outperformance, infrastructure-linked shares have held up better during August’s pullback. Both ETFs have traded lower month-to-date, yet PAVE has declined less sharply than its semiconductor-focused counterpart.

Global X lists Howmet Aerospace, Quanta Services and Parker Hannifin as the three largest holdings in its infrastructure portfolio. These companies provide engineered components, electrical contracting and motion-control systems respectively, all regarded as essential inputs for large construction and modernization projects.

Beyond physical infrastructure, O’Connor emphasized the impact of electrification on asset selection. The Global X U.S. Electrification ETF (ticker: ZAP) targets firms engaged in grid enhancement, battery technology, electric-vehicle charging and efficient power management. ZAP has advanced nearly 24 percent year to date, outperforming SMH by several percentage points during the most recent monthly stretch.

Macro backdrop supports domestic investment

The push to relocate critical supply chains aligns with federal incentives such as the 2021 Bipartisan Infrastructure Law and the 2022 CHIPS and Science Act. Combined, these measures channel hundreds of billions of dollars toward transportation upgrades, renewable energy installations and semiconductor fabrication plants. The White House estimates that infrastructure funding alone will create or preserve millions of domestic jobs over the next decade, reinforcing private-sector confidence in capital-intensive projects.

Atkins contends that investors have largely priced in the software and consumer-facing benefits of artificial intelligence, while overlooking the physical networks required to sustain ever-increasing data flows. He argues that companies manufacturing electrical components, constructing transmission lines or supplying specialty materials could experience multi-year demand tailwinds as cloud providers and chipmakers scale capacity.

Imagem: Internet

Volatility across mega-cap technology stocks in August has also led some portfolio managers to diversify AI exposure by adding positions in ancillary industries. Industrial conglomerates, contract engineers and specialty equipment suppliers typically exhibit lower earnings variability than high-growth semiconductor designers, potentially offering a moderating effect on portfolio risk.

Comparative outlook

SMH’s year-to-date gains remain substantial, supported by record revenue forecasts from key holdings such as Nvidia. However, the ETF’s recent weakness reflects concerns about valuation and cyclicality within the semiconductor sector. In contrast, PAVE and ZAP capture broader infrastructure and electrification themes that extend beyond a single manufacturing node. Demand drivers include federal highway expenditures, utility-scale transmission modernization, commercial aerospace recovery and growing adoption of electric vehicles.

Although short-term performance hinges on macroeconomic conditions and interest-rate expectations, both ETF specialists maintain that reshoring and electrification represent structural trends rather than transient policy experiments. As companies expand domestic facilities to mitigate geopolitical risks, suppliers of engineered metals, power-management systems and construction services could play a central role in the next phase of U.S. industrial growth.

For investors seeking to balance exposure between high-beta AI beneficiaries and steadier industrial operators, infrastructure-focused funds may offer an intermediate solution. The combination of government incentives, corporate capital spending plans and the technical requirements of artificial intelligence suggests that demand for physical capacity will persist even if semiconductor valuations fluctuate.

Crédito da imagem: CNBC