Major technology companies like Alphabet, Meta Platforms, and Microsoft are investing a combined hundreds of billions of dollars per year to build artificial intelligence (AI) data centers. All of that spending is driving strong demand for semiconductors and related hardware, as well as for the associated services needed to support that infrastructure.

However, AI data centers don’t just run on chips and servers. They need electricity, too — and massive amounts of it. The AI power trade is based on the premise that demand for electricity to keep that digital infrastructure running is going to keep growing rapidly.

At this point, AI data center operators are inking deals to get electricity from whatever sources they can find. Some technology companies are even making deals with utilities to restart decommissioned nuclear reactors. And for a host of reasons, the clean energy segment is becoming a big part of the equation.

With that in mind, it’s not so surprising that the iShares Global Clean Energy ETF (ICLN 3.36%) is up by 66% in the past year, outperforming the broad S&P 500 index, the tech-heavy Nasdaq-100, and major oil companies like ExxonMobil and ConocoPhillips. Investors are enthusiastic about the potential for clean energy producers to help meet the booming demand for electricity.

If you’re bullish on AI and clean energy, here are a few reasons to invest in this renewable energy ETF.

iShares Trust – iShares Global Clean Energy ETF

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Current Price

$18.11

Demand for electricity is growing worldwide — especially solar

According to the International Energy Agency’s (IEA) World Energy Outlook 2025 report, demand for electricity is growing much faster than overall energy use. The IEA expects electricity demand to rise by at least 40% by 2035. Investment in global electricity generation has reached $1 trillion per year, up almost 70% since 2015.

Renewable energy will play a big role in meeting this demand. The IEA forecasts that from 2025 through 2030, renewable power generation capacity will increase by twice as much as it did during the previous five years. Of this expansion, 80% will come from solar photovoltaic power. IEA research notes that solar systems are becoming more popular because of their lower costs, simpler permitting processes, and wide social acceptance.

Over the next five years, 42% of the expansion in solar photovoltaic power will come from distributed applications (off-grid projects), not traditional utility installations. Countries like Pakistan and South Africa are rapidly adopting off-grid solar systems to help bring electricity to people and places that were previously underserved by existing utilities. The IEA also forecasts that by 2035, 80% of energy consumption growth will happen in parts of the world with “high quality solar irradiation.”

Image source: Getty Images.

This clean energy ETF invests in solar power

During much of the past five years or so, renewable energy stocks in general have not been particularly lucrative holdings. Then-President Joe Biden’s Inflation Reduction Act of 2021 provided extensive U.S. government support for the growth of clean energy, which was bullish for the sector. But companies that build energy infrastructure need to borrow a lot of money up front to finance their projects in hopes of gaining long-term, profitable cash flows. And after inflation skyrocketed in the wake of the pandemic, fast-rising interest rates in 2022 and 2023 became a particularly harsh headwind for renewable energy stocks. In large part due to that, the iShares Global Clean Energy ETF has averaged an annual return of negative 8.9% for the past five years.

President Donald Trump also promoted major changes in U.S. government energy policy beginning in early 2025, leading to the end of many green energy tax credits and the cancellations of some offshore wind energy projects. However, despite Trump’s aggressive moves to pull federal support from renewable energy, in the past year, the ETF has come roaring back as energy demand rose and interest rates continued to drop. The ETF gained 46.6% in 2025 and is up more than 10% year to date in 2026.

This fund is focused on companies that are capitalizing on the long-term transition to a low-carbon economy, with holdings that are involved in clean energy production from solar, wind, and other renewable sources.

The ETF currently holds 102 stocks. Its five largest positions are:

• Bloom Energy (10.4% of the value of the portfolio): Offers fuel cells for on-site distributed energy generation for data centers and other industrial clients.
• Nextpower (9.8%): Provides design, deployment, and operations of advanced solar power systems.
• First Solar (6.9%): Produces advanced thin-film solar panels and is the largest U.S.-headquartered solar photovoltaic manufacturer.
• Iberdrola (5.6%): Generates electricity from renewable sources like solar photovoltaic, wind, hydro, and other sources like conventional nuclear. It operates in Spain, the United Kingdom, the U.S., Mexico, and several other countries.
• China Yangtze Power (4.5%): Provides hydropower generation, power distribution, and other energy-related activities, and is the largest listed hydropower company in the world.

With the top five holdings making up about 37% of its portfolio, it’s not as highly diversified as some other broad index ETFs. As such, big changes in a few key stocks could have outsized impacts on its overall performance. Moreover, its expense ratio of 0.39% is not cheap.

However, even after its strong recent gains, the ETF might still be undervalued. Its price-to-earnings ratio is only 17.3, compared to the S&P 500’s ratio of 30.

If you believe that the AI data center buildout will continue and also want to support the world’s transition to renewable energy, the iShares Global Clean Energy ETF could be a good buy for you.