LIVE MARKETS-The dramatic race for natural resources to feed AI

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THE DRAMATIC RACE FOR NATURAL RESOURCES TO FEED AI

While investors have been busy making bets on the strongest technology stocks competing for artificial intelligence domination, the real battle has shifted well beyond algorithms and into natural resources, according to Darrell Cronk, chief investment officer for Wealth & Investment Management at the Wells Fargo Investment Institute (WFII).

As a kick-off point, Cronk described the U.S. invasion of Venezuela and capture of its President Nicolas Maduro earlier this month as a part of a much bigger trend.

"Venezuela is just one of many episodes we'll see in the race for control of the world's natural resources, specifically the commodities and minerals it will take to scale AI infrastructure," he said, adding that Venezuela sets a precedent that applications of military force once off the table or seen as "a measure of last resort, now enter the calculus as active considerations in the race for AI leadership."

Cronk sees 2026 as being all about positioning to secure natural resources and keep adversaries like China, Iran and Russia out of the Western Hemisphere.

"Today, both China and the U.S. are operating on the premise that the AI race will be won not solely with the best minds working on the best innovation but with the raw materials needed to build the fastest chips, the industrial metals needed to build the most advanced data centers, and the energy needed to quench AI's thirst for power," said the CIO.

And he writes that both countries appear to see the AI arms race going beyond business and becoming a national security imperative.

Along with Venezuela, he discussed U.S. interest in Greenland, China's interest in Taiwan and the Democratic Republic of the Congo (DRC) and why Ukraine is so important to Russia, Europe and the U.S.

Cronk notes that both Venezuela and Greenland have gallium, germanium, indium, tantalum and silicon, all used in advanced AI chips. They also have thorium, which is critical to uranium-233m and therefore, key to generating nuclear power needed to run data centers. So he sees focus remaining on Greenland, Colombia, Mexico, Canada and the Panama Canal - all either resource rich or strategically situated.

Switching to Taiwan, he notes that it produces over half the world's semiconductors.

And in the DRC, where the U.S. intervened in 2025 to attempt to end fighting between the DRC and Rwanda, he notes that 68% of the world's cobalt - used in lithium batteries - is produced there and that China does most of the mining. DRC also controls 10% of the world's supply of copper - needed for wiring in data centers. Moving to South America, Cronk points to China's significant presence in Chile, Argentina and Bolivia, allowing it to control 70% of global lithium processing.

Then he points to Russia's invasion of Ukraine and notes that it has eyes on the largely untapped, mineral-rich Arctic Circle. Ukraine's large supplies of rare-earth minerals have also garnered U.S. and European attention, according to Cronk who notes that Ukraine has the largest confirmed lithium reserves in Europe and some of the world's largest titanium reserves.

So what does all of this mean for U.S. investors?

On the plus side, Cronk sees a strengthening economy in 2026 and tailwinds from tax refunds to consumers, falling interest rates and deregulation.

But investors also need to be cognizant of the geopolitical risks arising from the superpower AI-race face-off and should expect volatility along the way. For example, some bold moves in the race could backfire or meet resistance. So he said: "Smart investors pray for sunshine and carry an umbrella."

With natural resources being key, he plans to pay attention to commodity supply-and-demand dynamics.

And Cronk suggests investors gain "healthy exposure" to industrial metals and expand their view of AI "beyond technology stocks and chatbots; and become good students of history, geography and geology."

Cronk likens the global race for AI resources to the "Amazing Race" television show in which two-person teams race around the world in an intense competition that sometimes brings unlikely alliances, withholding of information and "even attempts at brute force and deception."

In the AI race he says: "No matter how much we may harden our critical defense, industrial and technology infrastructure, those countries with superior intelligence will have the potential to utterly dominate. There is no security for those in second place."

Some strategists seek comparisons between the AI boom and the dot-com boom and burst at the turn of the century, but Cronk argues that "never in history has something quite like this happened."

"No guardrails. No airbags. No guarantees. No choice but to win," he said.

(Sinéad Carew)

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