Artificial intelligence has moved far beyond being a niche technology reserved for chipmakers and software developers. It is now influencing energy markets, infrastructure investment, and the way investors design their portfolios. According to investment professionals speaking on a recent episode of CNBC’s ETF Edge, those who focus only on traditional AI sectors may overlook where the next wave of value creation is actually happening.

A growing share of market momentum is being driven by the physical demands of AI itself. Massive computing workloads require reliable electricity, advanced cooling systems, stable power grids, and highly efficient data centers. These constraints are reshaping which companies benefit most from the AI boom. A clear example is Bloom Energy. After its 2018 IPO, the company spent years struggling to outperform its listing price. That changed dramatically when data centers began placing large orders for its on-site fuel cell systems. Since last year, Bloom Energy’s stock has surged more than 500 percent, pushing its market value beyond $30 billion.

This shift has opened the door to new opportunities in small- and mid-sized companies. Jennifer Grancio, global head of distribution at TCW Group, noted on ETF Edge that businesses once overlooked by the market are rapidly climbing in valuation. Many of these firms operate in highly specialized niches with limited competition, allowing their financial performance to improve well before investors fully recognize their potential.

At the heart of this transformation is the issue of energy reliability. As renewable energy became cheaper and more competitive, investors debated whether wind and solar could deliver consistent power. However, the rise of AI has changed the discussion entirely. Data centers cannot afford power interruptions, even brief ones, making constant energy supply a non-negotiable requirement.

This need for uninterrupted power has triggered a renewed push toward nuclear energy. Grancio highlighted increased investment in maintaining existing nuclear plants as well as the development of small modular reactors. These efforts are creating demand for specialized suppliers positioned upstream from utilities and major cloud service providers, accelerating growth in parts of the energy supply chain that were previously underappreciated.

Efficiency within data centers has also become a critical focus. As AI workloads expand, cooling systems and power management technologies are emerging as key bottlenecks. Investors are increasingly drawn to companies that dominate narrow technical fields, particularly where there are few viable alternatives. Being one of the top players in a constrained market can translate into strong pricing power and long-term growth.

Market structure plays a significant role in this dynamic. In some segments, only a handful of providers exist, creating near-oligopolistic conditions. While this concentration can amplify profits, it also increases risk, as operational mistakes or execution failures can have outsized consequences.

These complexities are helping drive interest in actively managed ETFs. While passive funds track broad indices and eventually include companies as they grow, active strategies aim to identify emerging winners earlier and stay invested through multiple stages of expansion.

Still, the risks are substantial. VanEck CEO Jan van Eck warned that some parts of the AI-driven ecosystem consist of smaller, financially fragile companies that are highly sensitive to changes in electricity demand. This exposure can lead to significant volatility along the way.

For that reason, he emphasized that no single AI-related theme should dominate an investor’s portfolio. Excessive concentration increases vulnerability to sharp market swings. Van Eck pointed to his firm’s nuclear-focused ETF, which reached extremely high valuations last year before pulling back to more reasonable levels.

Looking ahead, ETF specialists believe that as investors integrate AI into their portfolios more selectively in 2026, disciplined rebalancing and realistic risk expectations will be essential. A measured approach can help investors remain committed during periods of volatility, avoiding the twin pitfalls of chasing market highs or selling in panic during downturns.