International | 11:05 AM
This story features PILBARA MINERALS LIMITED, and other companies. For more info SHARE ANALYSIS: PLS
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS
AI and clean energy investing are starting a new, exciting time that feels like the 'Roaring Twenties 2.0'. A guide about smart ways to invest, how the market can change, and good options for the future.
By Paul Githaiga
Rising prices for everyday things and new technology are driving an industrial surge reminiscent of the 1920s. This is reshaping AI market trends, clean-energy investing, and thematic strategies for investors worldwide.
-In this Roaring Twenties 2.0, AI and clean-energy capex are matching the scale of the 1920s electrification boom—only this time, the power comes from data centers and solar grids.
-Pension and sovereign funds allocate 9–12% of AUM to tech and renewables.
-Hedge funds leverage 30% AI-sector volatility with nimble quant models.
The 2020s mirror the Roaring Twenties. AI automation and a global clean-energy surge are powering GDP growth of 3.0% in 2025 and 3.1% in 2026.
Investors tuning into AI market trends and clean-energy investing can deploy thematic strategies to catch structural gains in emerging market leaders.
Macro Trends
The Next Industrial Revolution
Global growth forecasts for 2025 hold at 3.0%, up from 2.9% in 2024.
–AI Infrastructure Capex: Big Tech is on a US$400bn AI spending spree, and Wall Street loves it. Microsoft just joined Nvidia in the US$4trn club. Meta is right behind Google and Amazon in the US$2trn club.
–Renewable-Energy Capex: Global clean-energy investing will top US$3trn in 2024, with nearly US$2trn flowing into clean-energy technologies. That is almost double fossil-fuel spending. Yet emerging markets outside China capture just 15% of this growth, despite rising demand and lower technology costs.
–RBA Cash Rate: Australia’s Reserve Bank has held its cash rate at 3.85% since 21 May 2025. The local bond market is priced for two or three more rate cuts in coming months, starting in August (tomorrow).
Currency plays matter. The Aussie dollar surged 5.25% in H1 2025, echoing shifts seen in gold-standard eras. Australian investors now favour currency–hedged ETFs to shield against swings as AI market trends and other global themes dominate portfolios.
AI-Driven Technological Revolution
From Assembly Lines to Algorithmic Engines
AI venture funding surged to US$110bn in 2024, a 62% year-on-year growth, accounting for 37% of all global VC deals.
In the first half of 2025 alone, generative-AI startups raised US$49.2bn, driven by record rounds for Databricks, Anthropic, and OpenAI. Asset managers now dedicate 6–8% of assets under management to pure-play AI innovators, up from just 2% in 2022.
In Australia, IDC forecasts the APAC region (excluding Japan and China)—led by Australia—to hit US$28.2bn in AI spending by 2027. Locally, the S&P/ASX All Technology Index (XTX) has surged 42.9 % over the past 12 months and outpaced the ASX 200’s 6.16% YTD gain as of 5 August 2025.
Big Tech is matching private markets dollar for dollar. Microsoft, Meta, Alphabet, and Amazon plan nearly US$400bn in AI capex for 2025, more than the European Union spent on defense in 2024.
Morgan Stanley projects US$2.9trn in cumulative spending on chips, servers, and data centers through 2028, fueling up to 0.5 percentage points of the U.S. GDP growth per year.
Chart showing forecast AI capital expenditure from 2024 to 2028, rising from US$400bn in 2025 to US$2.9trn cumulatively, led by Microsoft, Meta, Alphabet, and Amazon.
Nvidia leads the charge with a +65% YTD share gain, while Alphabet is up +48% YTD. M&A activity in AI infrastructure hit US$90bn in Q2 2025, building on prior landmark transactions, such as BlackRock’s US$12bn GlobalSwitch acquisition in 2023, which continues to influence 2025 data-centre valuations.
Volatility in the sector remains elevated: the Nasdaq AI Index shows 30% 30-day realised volatility versus 18% for the S&P500.
On the regulatory front, the EU AI Act’s final rules land in Q4 2025, likely sparking fresh re-rating events as compliance costs and data-access mandates reshape company valuations.
This tidal shift—from mass production to machine-driven insights—demands agility. Investors must balance bold AI bets with disciplined risk controls to thrive in the new industrial era.
Clean-Energy Build-Out
Rewiring the World
Investment in clean–energy technologies surged past US$2trn in 2024, driving total global clean-energy investing above US$3trn for the first time. Clean-energy outlays are now nearly double those in coal, gas, and oil combined.
According to the IEA’s main scenario, global renewable capacity additions climbed to around 666GW in 2024 and are projected to grow to nearly 935GW annually by 2030.
Solar PV leads the charge, accounting for almost 80% of new capacity—roughly 553GW last year—with wind adding around 116GW.
Together, solar and wind are expected to make up 95% of all new renewable capacity through 2030, thanks to competitive costs and strong policy support worldwide.
Bar chart comparing 2024 global energy investment: US$2trn in clean energy versus just over US$1trn in fossil fuels, with solar and wind leading renewable investment.
While the surge is impressive, it masks deep inequities. Emerging economies outside China account for just 15% of total clean–energy investment, suggesting significant gaps in funding where it is most necessary.
Solar power is set to lead the clean-energy investing surge in 2025, with global spending on utility-scale and rooftop projects expected to top US$450bn. That makes it the single largest line item in the world’s energy investment ledger.
Battery storage isn’t far behind—capital flowing into advanced storage solutions is projected to jump past US$65bn this year, underscoring how rapidly storage is moving from supporting role to centre stage in the Roaring Twenties 2.0 energy transition.
Carlos Gomez, head of infrastructure at a major sovereign wealth fund, notes: “Clean–energy investment finally eclipses fossil fuels. Still, the lion’s share stems from advanced economies and China. Developing regions must catch up or risk being left behind.”
Investor Positioning & Pension Fund Inflows
Big Pools Chase Thematic Alpha
Institutional capital is clearly shifting. Large public pension investors like CalPERS are allocating tens of billions to green infrastructure and thematic strategies, with a broad commitment toward sustainable assets projected to reach US$100bn by 2030.
Globally, thematic investing in AI and renewables continues to drive capital flows. In Australia, the trend is equally clear; ASX-listed exchange-traded funds (ETFs) saw record net inflows of $33.49bn in 2024 (ASX 2025 Mid–Year ETF Report; Vanguard Australia).
That is more than double the $15bn recorded in 2023, according to Vanguard and ASX aggregate data. These inflows helped industry assets under management swell almost 39% to $246.3bn by year-end.
Momentum has carried into 2025. Australians invested over $11bn in ASX-listed ETFs during Q1, with Vanguard alone accounting for $7.1bn (34% of total flows) in H1 2025.
A significant share of that goes into thematic strategies, especially global equity ETFs, mirroring the broader AI market trends and clean–energy investing themes seen worldwide.
This reflects the ongoing evolution of the Australian market; a modern echo of the 1920s mutual fund revolution, but this time via themed structures.
Super funds and institutional investors are anchoring portfolios while retail and digital platforms drive further inflows into global and innovation-focused ETFs.
Hedge Fund Strategies & Volatility
Nimble Plays in Choppy Waters
Brookfield Asset Management’s announcement in June 2025 of a SEK95bn (circa US$9.9bn) investment in an AI data centre at Strangnas, Sweden, highlights how global funds strategically pursue thematic infrastructure exposed to AI volume and volatility.
These long-term assets help certain investment groups make money steadily, even when the market is uncertain.
In Australia, big investors are starting to use volatility-aware instruments like ASX200 VIX Futures to protect their money in the stock market. The ASX VIX futures handle rising local volatility and support thematic positioning in the Australian equities market.
Global volatility-targeting fund AUM rose approximately 22% in 2024, according to industry reports. That trend is likely mirrored locally as super funds boost allocations to managed volatility solutions in response to thermal monetary shifts and equity swings.
Public data reveal ASX-listed data-centre-like equities, such as those in global REITs with AI infrastructure exposure, rose strongly in value. Some rose by more than 50% over two years, mirroring global trends and offering Australian investors access to digital infrastructure-linked growth.
Meanwhile, hedge fund-like long/short ETFs launching on the ASX, such as VanEck’s new long-short complex ETF, are layering tactical thematic bets into traditional allocations. These funds target relative value opportunities across sectors like technology, renewables, and industrials.
Risk models now include extreme drawdown scenarios—like 30% drops in AI-related equities or grid-disruption stress tests—echoing the tighter margin requirements imposed post-1920s market crashes. Australian and global managers alike are calibrating risk exposures accordingly.
They are blending AI market trends and clean-energy disruption with shock-absorbent portfolio design.
Each of these plays loops back to the “Roaring Twenties 2.0” narrative.
Investment Implications
Positioning for Roaring Twenties 2.0
Market dynamics favour value-focused winners. Data–centre operators, including global platforms like Equinix, returned approximately 52% over the two years to July 2025 (Nasdaq performance data). This demonstrates their appeal to infrastructure allocators tethered to AI market trends.
Battery–storage and electrolyser manufacturers attracted record funding as part of clean-energy investing, with battery storage alone exceeding US$50bn in 2024 and electrolyser startups raising over US$6bn.
Meanwhile, Green bond issuance hit US$672bn in 2024, a 9% increase from 2023, according to the Climate Bonds Initiative’s Global State of the Market Report 2024. Europe remained the largest market, with over half of the total issuance, while sovereigns and development banks continued to anchor demand for sustainable debt.
In Australia, ASX–listed Pilbara Minerals ((PLS)) has unveiled a $1.2bn plan to double lithium spodumene output at its Pilgangoora operation in Western Australia, targeting annual production of up to 1.9m tonnes pending a final feasibility study in late?2025.
This expansion—alongside innovative processing trials with Calix Ltd ((CXL))—positions Pilbara to benefit from long–term demand in battery supply chains. For diversified exposure, local investors can also look to VanEck’s Global Clean Energy ETF ((CLNE)), which offers a basket of international renewables and storage leaders aligned with Australia’s clean–energy trajectory.
Opportunities emerge in thematic ETF strategies, particularly vehicles focused on AI, renewables, and infrastructure. Retail and institutional drives toward innovation-focused ETFs—such as BlackRock’s AI-themed fund raising US$4bn in Q1 2025—signal firm investor conviction around thematic strategies. Additional tailwinds are visible in private-market clean-tech funds and venture-debt vehicles channeling capital into early-stage electrification and AI hardware plays.
That said, risks remain. Overvaluation in mega-cap tech stocks poses re-pricing risk in sudden sentiment shifts. Rules from regulators, like the EU AI Act, may add costs for companies, which could make them less valuable. Also, delays in getting computer parts are slowing down the growth of AI and clean energy technology.
For pragmatic investors, blending stable core holdings with tactical thematic allocations—capped at around 8% of portfolio AUM—offers a way to manage concentration and volatility while still capturing upside from structural trends.
This approach mirrors key lessons from the Roaring Twenties, updated for a modern era defined by AI innovation and clean-energy acceleration.
The Takeaway
A Century-Old Playbook, Rewritten
AI and clean energy are powering a modern boom as transformative as 1920s electrification.
Investors who mix broad exposure with nimble thematic bets, and back them with rigorous data analysis, will ride the next wave.
Will you join the charge… or watch from the shore?
Technical limitations
If you are reading this story through a third party distribution channel and you cannot see illustrations included, we apologise, but technical limitations are to blame.
Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.
FNArena is proud about its track record and past achievements: Ten Years On
Click to view our Glossary of Financial Terms
CHARTS
For more info SHARE ANALYSIS: CLNE - VANECK GLOBAL CLEAN ENERGY ETF
For more info SHARE ANALYSIS: CXL - CALIX LIMITED
For more info SHARE ANALYSIS: PLS - PILBARA MINERALS LIMITED