BNY Mellon Manager Sees More Room in AI Infrastructure Trade

Brock Campbell, manager of the BNY Mellon Global Infrastructure Income ETF (BKGI), says the investment opportunity created by artificial intelligence in power and energy infrastructure is far from exhausted. "We haven't even scratched the surface; infrastructure is a long, long tail," Campbell told MarketWatch in an interview published Sept. 23. "It takes a long time for regulatory approval for building and then obviously deploying."

The fund has returned 21% a year over the past three years, ahead of a 16% annualized gain for its benchmark, the S&P Global Infrastructure Index, and holds a five-star rating from Morningstar. Its assets reached $1.9 billion as of Sept. 21, more than triple the $640 million it held in February.

Why AI changed the infrastructure sector

For decades, U.S. electricity consumption stagnated, and the infrastructure sector stagnated with it. "We hadn't had a growth market in infrastructure in 30 to 40 years," Campbell said. That changed in late 2022, when ChatGPT debuted and Campbell's team realized how much power next-generation AI chips would need. Campbell described it as a "lightbulb" moment that led the team to study the supply chain behind AI and the "pinch points" within it.

The first target was power generation. Utilities that generate electricity have historically been very cyclical, but Campbell saw companies that looked stable and defensive while also having the potential to "sign deals with data centers at high prices." The fund bought Dominion Energy (D) in late 2022. Earlier this year, NextEra Energy (NEE) announced a $67 billion merger with Dominion.

Campbell also sees the sector as a defensive holding, describing telecommunications and data as vital basic needs. "These are things you're not just going to cut off when the economy weakens, and that's a fantastic opportunity to introduce ballast into a portfolio," Campbell said. "Infrastructure offers diversification, downside protection, and inflation protection that are particularly appealing in today's environment of elevated geopolitical uncertainty."

The bet on natural-gas pipelines

The fund's current focus in the U.S. is natural gas. "We fundamentally believe there is going to be a massive build-out of new natural gas-fired facilities, and in order for those facilities to run, you need the pipelines to connect to them," Campbell said.

Because new long-distance pipelines are hard to build, the fund looks for companies with "world-class existing pipelines" that can add smaller connecting lines to serve new gas plants. Hess Midstream (HESM) is the fund's largest holding. "In the U.S., we don't believe that excitement has come through, so we think that's an area where investors could benefit from the AI buildup," Campbell said.

Pipelines also serve as a play on energy security, a theme Campbell said has gained weight since the outbreak of the war with Iran. "Clearly infrastructure plays a critical role in both the electrification side, but also on the oil- and natural-gas pipeline side," Campbell said.

A shift toward Europe

The fund has been moving money out of U.S. utilities and into regional European ones. Campbell acknowledged that Europe's regulations for data centers will likely be tougher, but said "the first pinch point is going to be access to power."

The team's thesis rests on data sovereignty, the need to keep data centers and the data they hold within a region for security reasons. "We believe that Europe was going to have to eventually replicate, and we're at the very early innings of that replication," Campbell said.

European holdings include Finland's Fortum, which recently signed a long-term electricity supply agreement with Alphabet's (GOOGL) Google to support its AI expansion in Europe, as well as Spain's Naturgy Energy and France's Bouygues and Engie.

Power contracts and new gas plants

• Data-center power contracts signed by utilities in the U.S. and Europe, like the Fortum agreement with Google.
• Approvals and construction of new natural-gas-fired power plants, which Campbell's pipeline thesis depends on.
• Progress on the NextEra–Dominion merger.
• Demand from new AI tools; Campbell pointed to agentic AI as especially power-hungry, saying "the compute just feels insatiable to me."