For years, the Age of AI was defined by code, algorithms, and digital interfaces. However, as we head into 2026, the narrative has shifted from the virtual to the visceral. As countries scramble to lead the AI race, a massive physical build-out of infrastructure is underway, turning once-stable commodity markets into high-stakes strategic battlegrounds.

While the software might be in the cloud, its reality is anchored to the earth. New-generation hyperscale data centres—the engines of AI—now require three to five times more copper than earlier designs. Silver has transcended its role as a precious metal to become a critical industrial conductor for the expanding semiconductor market. Simultaneously, aluminium is facing its tightest market in years as it reinforces the high-capacity transmission networks and renewable energy grids needed to feed AI’s insatiable hunger for power.

This report utilises key data points from the Kotak Securities Market Outlook 2026 to explore the physical backbone of the digital age.

The AI bubble debate: Is scarcity the new reality?

A central question for 2026 is no longer just whether AI works, but if the world can physically support it. While the ‘AI bubble’ remains a hot topic, the Kotak Securities report offers a sobering reality check. It warns of a deceleration in the US. AI-related expenditures could precipitate a market correction. Furthermore, the sharp run-up in asset prices has created an ‘illusion of wealth’ despite subdued household income growth.

However, for the commodities building this era, the value isn't just in the hype—it's in the scarcity. While the IMF projects global real GDP growth to slow to 3.1% in 2026, the demand for AI-essential materials is decoupling from this broader slowdown due to deep structural deficits.

Copper’s ‘one-week’ warning

Copper enters 2026 with a ‘constructive bias’—a bullish outlook driven not by speculation, but by extreme physical tightness. The market currently operates with extremely thin buffers, with global inventories estimated to be equivalent to barely one week of consumption.

The market is now hypersensitive to any logistical stress or supply outage. With no meaningful new supply expected in early 2026, the rapid build-out of AI data centres in the US, India, and the Middle East is set to become a permanent demand pillar that the current supply chain is struggling to meet.

Silver: The high-tech safe haven

Silver’s record climb to over $59 per ounce in 2025 was driven by more than just safe-haven demand; it is now a fundamental ‘pick and shovel’ for the AI era. The market remained in a structural deficit for the fifth consecutive year in 2025.

Its role is being redefined by:

• Semiconductor growth: Widening applications driven by advanced computing and AI.

Aluminium and the powergrid backbone

You cannot have a digital revolution without a massive expansion of the powergrid. Aluminium is seeing its tightest supply environment in years, largely because it is the primary material for large-scale grid reinforcement.

China’s production ceiling of 45 million tonnes has essentially been reached, meaning any growth in supply will be marginal. As India and Southeast Asia lead infrastructure investment, aluminium remains the essential material for the high-capacity transmission networks and EV charging systems required by the AI build-out.

Whether or not we are witnessing an AI ‘mania’ similar to the 1990s, the physical infrastructure being laid today represents a permanent shift in the global economy. As we head into 2026, the winners will not just be those with the best algorithms, but those who have secured the physical metals required to run them. In an era of ‘statistical opacity’ and digital illusions, the reality of copper, silver, and aluminium has never been more certain.