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Chapter 1: What significant growth did token consumption experience last year?
token consumption last year grew 17 times. Not 17%, which I think most people would view as a pretty good growth company, 17 times growth of token consumption. Essentially, as much money as the major large language model providers are plowing into capital expenditures, they can't keep up with AI demand.
So even just in the last several months, I think the narrative has shifted in the market from that of Are we worried companies are over-investing in capex, to what if companies are actually under-investing in capex?
That was BlackRock's U.S. head of equity ETFs, Jay Jacobs, breaking down what the data actually says about AI's growth trajectory. I'm Motley Fool analyst Rachel Warren. I sat down with Jay to dig into BlackRock's newly released 2026 thematic outlook, covering everything from the AI infrastructure build-out to tokenization to what retail investors should be doing with their portfolios right now.
Enjoy. Hello, everyone, and welcome back to Motley Fool Conversations. I'm Motley Fool analyst Rachel Warren, and today I'm excited to welcome Jay Jacobs, the U.S. head of equity ETFs at BlackRock, to the show. Jay oversees the overall product strategy, thought leadership, and client engagement for the firm's index and active equity ETF business.
Prior to his current role, Jay founded and led GlobalX ETF's research and strategy team and previously served as a business analyst at the New York Stock Exchange, where he helped launch hundreds of ETFs on the NYSE ARCA trading platform. Today, we're going to be diving deep into the massive structural shifts shaping the global economy.
with BlackRock's newly released 2026 Thematic Outlook, which details how the next leg of AI compute is colliding with physical power grid bottlenecks, surging sovereign defense spending, and a massive wave of real-world asset tokenization. Jay, welcome to the show.
Thanks for having me on.
So as U.S. head of equity ETFs, from your standpoint, I would love to hear your thoughts on how the view of a traditional portfolio has changed now that thematic funds have grown over 11x just in the past decade.
Well, I think it's important to recognize portfolio management techniques have always been evolving as the world has evolved, as data and software has evolved to make portfolios be able to be managed in different ways and assess risk and opportunities in different ways.
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Chapter 2: Why is the physical AI infrastructure build-out still in its infancy?
So there was data in the report from McKinsey that projected cumulative global infrastructure investment is set to top about $100 trillion by 2040. And that's driven by a range of factors, including AI compute, national security, supply chain resilience initiatives. How can a long-term investor evaluate these sectors across this really, truly massive capital rollout we're seeing?
Well, interestingly, despite the amount of capital we're seeing allocated to infrastructure, it remains a relatively small part of people's portfolios. In fact, average infrastructure allocation in the S&P 500 is about only 3%, so less than some of the MAG7 names alone. And yet we just see tremendous amounts of drivers for more infrastructure spending.
We have changing demographics around the world, which is growing economies, growing populations that need More infrastructure. We have aging infrastructure, particularly in the developed market where a lot of it was built in the 1960s and needs to be refreshed. We have changing infrastructure demands where it's not only about physical infrastructure.
There's also needs for digital infrastructure going forward. And so there's really a lot of tremendous tailwinds behind infrastructure, and yet it remains a relatively small part of people's portfolios. So I think we're going to see a significant amount of investment over the next several decades.
I think a lot of that is going to increasingly come from the private sector, given that a lot of governments just simply can't afford to keep building more infrastructure. And that should likely drive more and more investors to allocate to infrastructure as an asset class in their portfolios.
I want to switch a bit to talk about the relationship between what we've been speaking of and tokenization, digital assets. So the report noted that the iShares Bitcoin Trust ETF became the fastest growing ETP in history. It surpassed $70 billion in AUM in just 341 trading days across 2024 and 2025.
What does that level of speed and adoption tell us about the current capital demand for digital assets?
Well, iBit was a product, is a product that really bridges between traditional finance and decentralized finance.
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Chapter 3: How have portfolio management techniques evolved with thematic ETFs?
The idea that we could take a decentralized finance asset like Bitcoin, wrap it in an exchange traded product and make it available to basically anyone with a brokerage account brought DeFi into the TradFi world. And we expect that trend to likely to continue. There's a lot of demand for assets that can behave differently than stocks and bonds.
And so we've seen a tremendous amount of interest from the traditional finance space in an asset like Bitcoin, where it's more driven by things like geopolitical uncertainty, rising distrust in institutions, the risk of debasement of currencies or rampant inflation. All of those things tend to be providing tailwinds for an asset like Bitcoin.
And we live in an environment where I think those are very real risks. So increasingly, very traditional portfolio managers are looking at Bitcoin as a way to hedge out some of those risks in their portfolio.
A significant share of tokenized real world assets currently reside on the Ethereum blockchain. And we're also seeing expectations that tokenization will continue to expand across asset classes. So how do you see tokenization reshaping access, liquidity and transparency for a broader range of investors?
Well, it's likely to evolve. Right now, what we largely see is tokenized cash or stable coins, and that's where the massive amount of volume is occurring today. There needs to be a market that develops around this. When you have tokenized assets, you need to have the infrastructure behind it. You have to have the market-making capabilities. There needs to be sensible regulation around it.
So there's a whole ecosystem that has to develop around it, but there's certainly the promise of Tokenization that could allow for the 24-7 trading of assets, trading around the world, instantaneous settlement, perhaps easier access to decentralized finance tools like lending through smart contracts.
So there's a lot of promise through tokenization, but it's also about really having an ecosystem develop around it to support it appropriately.
Couple more questions for you as we draw to the close of our discussion today. One, you know, the 2026 outlook really did a brilliant job of connecting the dots between compute power grids and geopolitics and how all of these themes interplay.
But looking beyond that, looking ahead to the next three to five years, what are maybe one or two emerging or under the radar themes or maybe tech breakthroughs that you think maybe investors should be paying close attention to?
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