The surge in artificial intelligence (AI)-driven electricity demand is turning what was once a niche infrastructure story into one of the market's most compelling long-term investment themes, according to Yuri Khodjamirian, CIO of Tema ETFs.

In an interview with MarketDash, Khodjamirian said the U.S. is entering a prolonged cycle of investment across power generation, grid infrastructure and electrical equipment after decades of underinvestment, creating opportunities for companies positioned across the electrification value chain.

"What we identified was really a situation where you had three decades of underinvestment in electricity infrastructure in the United States," Khodjamirian said. "And suddenly, you were getting this inflection where AI demand from power centers, data centers, electric vehicles, digital assets, but also this reshoring boom that was happening in the U.S."

AI Is Accelerating an Existing Trend

While electrification was initially associated with electric vehicles and the energy transition, Khodjamirian believes the rapid buildout of AI infrastructure has significantly expanded the investment opportunity.

"The reality is, those are good growth drivers, but they're just part of the puzzle," he said. "It was really when AI data centres started to get built, that people realised that AI training, and also AI inference, take on a lot of power use."

The CIO noted that hyperscalers, including Google and Amazon, are signing long-term power contracts and investing in new energy technologies to secure future electricity supply.

"The need for power is so acute," he said, adding that AI companies are effectively becoming a major catalyst for investment across the power ecosystem.

Why the Opportunity May Still Be in Its Early Stages

Despite strong performance among many electrification-related stocks, Khodjamirian argues investors have not missed the opportunity.

"We believe we're very much still in the early innings of this, even though we're a year in," he said.

According to Khodjamirian, supply constraints across transformers, gas turbines and grid equipment suggest the cycle could last longer than many investors expect.

"To put it very simply, you don't fix 30 years of underinvestment in a couple of years," he said. "The supply response, many of them are saying we have not enough capacity to meet demand."

He also pointed to the aging U.S. power grid as a major driver of future spending.

"The U.S. electricity grid is 40 years old. So it's just in need of a lot of investment," he said.

VOLT's Differentiated Approach

Khodjamirian said the Tema Electrification ETF (NYSE:VOLT) differs from broader energy transition and utility-focused ETFs because it offers pure-play exposure to electrification and emphasizes underfollowed mid-cap companies benefiting from infrastructure spending.

"We focus a lot on these what we call under-the-radar companies, the mid-cap industrial base of the U.S. delivering this electrification investment theme," he said.

He cited names such as Powell Industries Inc (NASDAQ:POWL) and Bel Fuse Inc (NASDAQ:BELFB) as examples of companies often overlooked by investors focused on larger players like GE Vernova Inc (NYSE:GEV) and Eaton Corporation PLC (NYSE:ETN).

"Often the mid caps have the most explosive growth, but are big enough to take advantage of these large projects," he said.

The fund currently derives roughly 80% of its revenue exposure from the U.S., reflecting Tema's view that America remains the epicenter of the electrification investment cycle.

Investors Looking Beyond Semiconductors

Khodjamirian said investor interest in electrification continues to grow as market participants seek AI exposure beyond semiconductor stocks.

"The investors that I talk to... believe that this is a core allocation of their funds because they see what's happening in AI, but they're scared about chasing semiconductors," he said.

"They're looking for good, solid exposure in quality companies that are related to AI but have other growth drivers as well."

As a result, he believes electrification is increasingly becoming a strategic portfolio allocation rather than a tactical trade, supported by both strong fund flows and long-term infrastructure demand.