This Metal is Crucial for AI, Yet in Short Supply. Here Are 3 Top Mining Stocks to Buy to Capitalize on the Looming Deficit.

You cannot build a data center without copious amounts of copper -- and that goes double for an artificial intelligence (AI) data center. A traditional data center requires between 5,000 and 15,000 tons of copper, according to the Copper Development Association. AI data centers, by contrast, can need up to 50,000 tons of copper per facility.

An enormous amount of money will be spent on constructing AI data centers over the next decade by cloud computing providers such as Meta Platforms, Amazon, and Alphabet, the parent of Google. They plan to spend some $765 billion this year on AI infrastructure, according to Goldman Sachs, a figure that's expected to increase to more than $1.6 billion by 2031.

As a result of that investment, AI data centers could use half a million tons of copper a year by 2030. That's in addition to all the copper needed for other modes of electrification.

Image source: Getty Images.

The global copper supply gap is poised to widen

Yet the supply of new copper is not keeping pace with the feverish growth in demand.

Daniel Yergin, vice chairman of S&P Global, put it this way: "Economic demand, grid expansion, renewable generation, AI computation, digital industries, electric vehicles, and defense are scaling all at once -- and [copper] supply is not on track to keep pace." S&P Global published a study in January predicting that global copper supply will be 24% short of demand by 2040.

That's why the price of copper has jumped 57% over the past five years and 35% over the past 52 weeks. At the moment, I don't see any long-term factors that will keep that price growth contained over the coming decade. So investing in copper right now is a very smart move. I've identified three ways to do it effectively.

Freeport-McMoRan is the world's largest public copper company

Freeport-McMoRan (NYSE: FCX) is an American mining company based in Phoenix, Arizona. It operates global mines that produce several metals and elements, including copper, gold, and molybdenum, an element used in steel alloys. And it is the world's largest publicly traded copper-focused company.

The company's assets include the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits, and significant operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America.

The stock is up 70% over the past 52 weeks.

Also headquartered in Phoenix, Southern Copper (NYSE: SCCO) operates copper mines in Mexico and Peru, and it's the world's second-largest publicly traded copper company. It also produces molybdenum, zinc, and silver (all of which are also critical to data centers). The company is majority-owned by Grupo Mexico, a Mexican conglomerate involved in mining, transportation, and infrastructure.

The stock has more than doubled in price over the past year.

Finally, there's the Global X Copper Miners ETF (NYSEMKT: COPX). I've been writing about this ETF for months. It provides investors with access to a broad range of copper mining companies. The fund currently has net assets of about $8.2 billion. It holds 41 different copper miner stocks (including Freeport-McMoRan and Southern Copper), with no one stock accounting for more than 6% of the fund.

So if you're looking to diversify your copper investment among a lot of producers, COPX is a great way to do so. The ETF has more than doubled in price over the past year.

The AI data center build-out appears set to continue driving the stock market higher for the foreseeable future. Many companies beyond the cloud compute firms will benefit from it, from electric utilities and construction equipment firms to manufacturers of memory chips. Copper producers, too, should see big gains.

Matthew Benjamin has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Goldman Sachs Group, and Meta Platforms. The Motley Fool has a disclosure policy.