The Nvidia Blindspot: Where the Next 80% of AI Profits Are Hiding

A senior executive at VistaShares is urging investors to rethink how they gain exposure to major technological shifts, arguing that traditional thematic exchange-traded funds (ETFs) may overlook critical segments of value creation in emerging “super cycles” such as artificial intelligence and electrification. “We wanted to find a way to accurately give people ways to proportionately get exposure to super cycles,” David Fetherstonhaugh, Executive Vice President at VistaShares, said in an interview with AInvest’s Capital & Power.

Fetherstonhaugh said the firm was founded in part to address what it views as structural shortcomings in existing thematic ETFs, particularly their tendency to mirror broad market exposures. “A lot of the ETFs that we were able to find in this market had 45% overlap with SPY,” he said, referring to the S&P 500 ETF.

VistaShares’ strategy centers on constructing ETFs that reflect the underlying economic inputs of a technological ecosystem rather than emphasizing large-cap companies that investors may already own. Its AI Infrastructure ETF (ticker: AIS), launched in December 2024, allocates capital based on the relative importance of components within a data center. “We want our actual index composition to look more like a parts list to a data center,” Fetherstonhaugh said, noting allocations to segments such as cooling and memory in proportion to their real-world cost share.

Performance has been strong, according to Fetherstonhaugh, who said the fund is up “around 112% since inception” and “around 50% year to date,” depending on market conditions.

A second product, trading under the ticker POW, reflects what Fetherstonhaugh described as a critical constraint on the AI buildout: energy. “There’s kind of the limitations of AI, but there’s also the limitations of power and the physical limits of what you can actually get access to,” he said.

Rising electricity demand from data centers, electric vehicles, and electrified heating systems is placing new strain on legacy grid infrastructure. “We kind of always joke that the grid was made for microwaves and radios, and now we’re trying to install all these data centers… and it’s just not prepared for that,” Fetherstonhaugh said.

Despite concerns about local opposition to data center expansion, he said strong capital investment from large technology firms could reshape how infrastructure costs are distributed. “You have this really awesome opportunity right now where there’s a lot of money very invested in getting access to power that could actually subsidize the rates for the rate base,” he said.

VistaShares also takes a differentiated stance on semiconductor exposure, maintaining a relative underweight to widely held names. Fetherstonhaugh argued that focusing too narrowly on companies like Nvidia risks missing broader spending trends. “It’s only…20% of what will go into a data center… So there’s 80% of what was happening…that people just weren’t getting access to,” he said.

Much of that spending, he added, is flowing to international suppliers, particularly in Asia and Europe, which may be underrepresented in domestic portfolios.

Fetherstonhaugh said the firm remains optimistic about the long-term trajectory of AI and related infrastructure investments. “We still believe we’re very much so in the early innings,” he said, pointing to technology’s relatively low share of gross domestic product and the foundational role of compute infrastructure in enabling growth.

For investors, opportunities tied to major technological shifts may lie not only in headline companies, but across the supply chains and physical systems that enable them, particularly in energy and infrastructure.