The recent OpenAI and Oracle Corp. ORCL partnership is set to transform AI infrastructure with the launch of their massive data center initiative, Stargate. This $100 billion project, starting with a Texas facility, has the potential to reshape semiconductor demand and high-performance AI computing. With Nvidia’s NVDA latest GB200 chips at the core, Stargate shows how the race in AI supercomputing is picking up pace.
Adam Patti, CEO of VistaShares, sees Stargate as a pivotal moment in the global AI arms race, with major geopolitical and corporate players vying for dominance. “This announcement was seismic related to this new global AI arms race. Countries and companies alike are competing not only for their future but perhaps for the global balance of power among nations,” he told Benzinga. He noted that China’s DeepSeek initiative was announced shortly after the U.S. unveiled Stargate, emphasizing the geopolitical stakes involved.
Given the significant CapEx involved in AI infrastructure, ETFs offering exposure to AI data centers and semiconductor supply chains stand to benefit. Patti highlighted that most AI-focused investment modes target the consumer application layer and dominant tech giants, whereas ETFs focusing on AI infrastructure capture immediate profits from CapEx investments.
ETFs Positioned To Benefit From Stargate
Patti identified the VistaShares Artificial Intelligence Supercycle ETF AIS as the only fund providing “pure exposure” to AI infrastructure. “Most ‘AI’ investment vehicles are focused on the consumer application layer of AI… The companies that are building this infrastructure today are the ones that are generating today’s profits, and those profits will experience massive growth over the next 3-5 years,” he explained.
On the other hand, Sylvia Jablonski, CEO of Defiance ETFs said, “Nvidia will remain dominant in AI compute, leading semiconductor ETFs (SOXX, SMH) to increase NVDA allocations,” when asked how semiconductor ETFs will be impacted given Nvidia’s role in Stargate.
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Nicholas Frasse, product manager with VanEck, echoed similar sentiments, emphasizing the role of semiconductor ETFs in benefiting from AI infrastructure developments. “Semiconductors are the backbone of AI technology, so it’s fair to say that this project and the planned spending by these businesses will directly impact the semiconductor sector in a positive way across various types of semiconductor companies,” he told Benzinga.
Frasse also identified ETFs, such as VanEck Semiconductor ETF SMH and VanEck Fabless Semiconductor ETF SMHX that could directly benefit from the Stargate initiative.
“VanEck Semiconductor ETF could be a direct beneficiary, as its holdings include all the leading companies in semiconductor manufacturing, design, and equipment,” Frasse said. “VanEck Fabless Semiconductor ETF is also in a unique position, as fabless businesses are poised to play a key role in advancing AI technology—particularly in training and inference—through their application-specific designs.”
While existing ETFs provide broad exposure to AI, fund managers may launch new products specifically targeting AI infrastructure investments. However, Patti cautioned investors to evaluate the investment process and expertise behind any new offerings. “Potentially, but since semiconductors are the fundamental building blocks of these data centers, we believe investing in the semiconductor sector remains the most direct way to gain exposure to this trend,” Frasse added.
Nvidia plays a crucial role in the Stargate project and semiconductor-focused ETFs could see shifts in allocations toward AI-centric semiconductor plays. While Nvidia enjoys a strong market position, competition is fierce. “NVDA has an incredible business model with a massive installed base of customers. This ‘moat’ is not easy for a competitor to overcome,” Patti said. However, he expects new entrants challenging Nvidia’s dominance, making it important for ETF managers to track industry innovation and emerging players.
Frasse noted that VanEck’s funds take the passive route, focusing on the largest and most liquid semiconductor companies. “Our products are passive and focus on the largest, most liquid semiconductor and fabless businesses globally that are listed in the U.S. The funds methodology aims to capture the winners in the space, and if AI-specific semiconductor companies continue to grow in market capitalization and meet index criteria, they will naturally gain an allocation in our ETFs.”
Jablonski stressed the broader impact of Stargate. “Stargate will have a notable impact on AI and semiconductors in general. You’ll have data center expansion which means more GPUs, more chips. Companies like NVDA, AMD, Broadcom, Oracle via cloud, software services will benefit. AI will become in theory more powerful, faster and will scale. You’ll have this synergy of AI, Quantum Computing and cloud services. This initiative will really push AI as a tangible theme for the fourth industrial revolution.”
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AI Infrastructure Investments And ETF Performance
Jablonski highlighted key ETFs, including Defiance Quantum ETF QTUM and Defiance Connective Technologies ETF SIXG, which she expects to benefit from AI infrastructure growth.
“Defiance Quantum ETF, VanEck Semiconductor ETF and other semiconductor AI-related funds would benefit,” she noted. “Something like Defiance Connective Technologies ETF may participate too as we need lower latency for the speed aspect, connectivity aspect to allow these trends to come to fruition.”
Patti, on the other hand, believes that AI and semiconductor ETFs will be heavily influenced by their portfolio compositions. “Those ETFs that are anchored to a large exposure to the MAG 7 will generally move in lockstep with their prospects,” he said.
Frasse suggested that ETF investors looking to capitalize on AI infrastructure should consider diversified exposure. “Given the current landscape, it’s difficult to gain direct, pure-play exposure to large language models (LLMs). We believe that the most meaningful way to invest in AI is by allocating to semiconductors in a way that aligns with a client’s risk tolerance. VanEck Semiconductor ETF offers access to the established leaders driving AI forward, while VanEck Fabless Semiconductor ETF provides exposure to the innovative fabless semiconductor companies leading the next wave of chip design and AI advancements.”
For investors, Patti recommends focusing on funds that intelligently analyze the AI supply chain. “We developed VistaShares Artificial Intelligence Supercycle ETF to directly capitalize on the AI infrastructure boom,” he explained. The ETF uses a rules-based methodology and an active oversight from AI industry experts to ensure exposure to high-growth areas within AI infrastructure.
Associated Risks
While AI infrastructure investments are surging, regulatory and geopolitical risks remain. “This is the big outstanding issue for sure. Governments need to come up with sensible solutions that don’t stifle growth yet provide protections for their interests,” Patti cautioned. Trade barriers, national security concerns and competition between AI superpowers like the U.S. and China could shape future investment flows.
Jablonski pointed out potential risks. “Potential risks could be the trade war – tariffs and supply chain disruption. Different policies and regulations around AI, cloud security or otherwise. The Trump administration, though, tends to favor deregulation for the time being. AI spending could double or even triple. AI and semi ETFs could outperform broad-based markets if that happens.”
Frasse also mentioned the financial risks associated with AI supercomputing infrastructure investments. “Investors should monitor balance sheet strength, R&D spending, and capital expenditure efficiency. Cash-rich firms like Nvidia and other fabless companies may continue to lead, as their business models allow greater flexibility to invest in R&D rather than capital expenditures.”
Jablonski noted that cash-rich companies do better than debt-heavy ones. “High spending should equal revenue expansion and watch out for excessive leverage,” she explained, highlighting the importance of choosing the right stocks or ETFs to invest in.
Parting Thoughts
The OpenAI-Oracle Stargate initiative can usher in a new phase in AI supercomputing, with deep implications for AI and semiconductor markets. Investors looking to capitalize on this trend might consider ETFs with exposure to AI infrastructure, semiconductor manufacturing and cloud computing. Nvidia, being at the heart of this transformation and competitors emerging, fund managers must adapt to make the most of the evolving environment of AI investment as the AI race intensifies.
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