Commentary by etoro analyst for Romania, Bogdan Maioreanu
Copper Remains Essential as AI Turns to Light and Diamonds
When it comes to AI development, copper is an essential element, as it goes into data centers, electric wires, transformers, busbars, cooling systems and even the circuitry of chips, memories and electronics. The push for electrification in automotive is adding more pressure, as EVs require three to four times more copper than conventional internal combustion engine cars, while global renewable energy grids and power infrastructure require massive multi-year expansions. Copper also has important applications for the defense industry. This makes copper one of the most strategically important metals and a truly versatile material. The need for copper in all these areas under expansion increases its demand. This is very visible in its prices, which climbed more than 30% in the past year. As technology advances, AI companies are starting to look beyond copper to optical fibre and diamonds.
Despite a strong demand outlook for Copper, the key challenge for the market remains the difficulty of developing new mined supply, as shown in the International Energy Agency Critical Minerals Outlook for 2026. Based on the announced mining projects, global primary copper supply could face a 25% deficit in 2035. Of all the copper deposits discovered in the last 35 years, only 5% have been discovered in the last decade. And the quality of ore has degraded by 40% since 1991, increasing capital costs and project complexity for the copper mines.
The race for AI is starting to create challenges where copper may no longer be the most suitable material. When it comes to signal transmission in AI chips, companies are trying to find a faster medium and are looking to photons in optical fibre instead of the electrons in copper. Companies involved in photonics development include Lumentum, Coherent and Marvell, alongside Corning, which supplies optical-connectivity solutions and received $500 million from Nvidia through a warrant transaction supporting their long-term partnership. Another area where data centers are trying to find the best solution is cooling. As compute generates huge heat quantities in large chip clusters, AI companies are trying to find the best solution to this problem. And now are looking toward diamonds.
In this way, the AI boom could create new demand for specialised diamond materials. Diamond prices have been falling, reshaping consumer choices as laboratory-grown stones become increasingly affordable. While in September 2026, a standard one-carat natural diamond cost around $3,900, down 51% from 5 years ago, laboratory-grown diamonds have experienced even sharper declines, with wholesale prices falling more than 75 % since 2022. China accounts for more than 60 % of global supply, making laboratory-grown diamonds increasingly difficult to market as scarce commodities.
Already widely used in cutting, drilling and grinding tools, laboratory-grown diamonds can also dissipate heat from powerful processors. Diamond’s thermal conductivity exceeds 2,000 W/mK, more than five times that of copper. In February 2026, Akash Systems announced deliveries of servers equipped with Nvidia H200 chips and diamond-based cooling, marking an early commercial application. Using diamond to cool existing chips is distinct from manufacturing diamond semiconductors, a more challenging technology constrained by expensive substrates and limited production. Forecasts suggest the broader industrial market for laboratory-grown diamonds could expand from approximately $2.1 billion in 2025 to $4.3 billion in 2034, although the scale of future AI-related orders remains uncertain.
Listed companies with exposure include Coherent, which develops diamond materials for heat dissipation, and Sumitomo Electric, which produces diamond single crystals and semiconductor-related materials. Anglo American also has exposure through its 85% stake in De Beers, owner of industrial diamond specialist Element Six, although its planned sale of De Beers could change that position. Diamonds represent only part of these groups’ businesses, so rising demand may not immediately translate into a significant earnings boost. If specialised production fails to keep pace with technology orders, prices in that segment could rise or decline more slowly. Any effect on jewellery prices remains uncertain. For investors, the key question is which producers can convert emerging applications into recurring orders and profits.
Despite these developments, copper is likely to remain essential to industrial and AI infrastructure for years to come. Optical links may replace selected copper communications connections, while diamond materials can improve heat dissipation, but copper’s unique combination of conductivity, versatility, and economic scalability ensures it will remain the foundational backbone of global tech infrastructure in the foreseeable future.
