AI Doesn't Run on Code Alone: Inside Tortoise Capital's AI Infrastructure Strategy

In this Dakota Insights interview, Chris LeRoy and Alex deMarco sit down with Robert Thummel, Senior Portfolio Manager and Investment Committee member at Tortoise Capital, to explore the firm's active ETF platform and the growing investment opportunity in AI infrastructure.

Tortoise Capital has built its identity around a simple mission: be the energy experts. Rob brings 30 years of energy investing experience and has spent the last 20 at Tortoise, alongside three co-portfolio managers with a combined 100-plus years of investment experience and four dedicated analysts. The firm offers a focused lineup of active ETFs spanning the energy and infrastructure landscape — from TNGY, its flagship fund covering the entire energy value chain, to more targeted products like the Tortoise MLP ETF, TPZ (Electrification Infrastructure), TCAI (AI Infrastructure), and the most recently launched TNUK (Nuclear Energy Renaissance).

At the center of the conversation is TCAI, launched last August on the core belief that AI does not run on code alone — it runs on infrastructure. Rob walked through the physical and digital backbone that makes AI possible: massive data centers the size of Central Park, data storage devices, network switches, cabling, and liquid cooling systems. A standout example is Modine, a 100-year-old Wisconsin radiator company that has transformed itself into a key provider of liquid cooling systems for hyperscaler data centers. TCAI is designed to give investors exposure to these "picks and shovels" of AI — essential, cash-flow-generating businesses that complement the mega-cap tech names most portfolios already hold.

Rob emphasized that electricity is becoming the new oil. After 20 years of flat US electricity demand, the country is now facing a projected ~75% increase over the next couple of decades, driven by data center growth in Northern Virginia, Dallas, Atlanta, and the Northeast. Hyperscaler capital spending is expected to reach roughly $700 billion in 2026 — nearly double the prior year — with much of that capex flowing into the infrastructure names TCAI holds. Despite this growth, valuations remain attractive: the portfolio's PEG ratio is materially lower than the S&P 500's, suggesting investors are capturing significant earnings growth at a reasonable price.

Rob also walked through Tortoise's disciplined risk management process. Every security is evaluated across three pillars — asset essentiality, cash flow quality and contract duration, and management team quality and capital allocation — and assigned a tier ranking from 1 to 4 that governs position sizing. Proprietary financial models support the process across a universe of hundreds of companies.

On the energy mix, Rob sees an all-of-the-above future. Natural gas, already at ~47% of today's generation mix, is expected to grow its share. Nuclear is positioned for a renaissance, with mothballed reactors coming back online and new enrichment and processing capacity being built. Solar, wind, hydro, and battery storage all play supporting roles. For Rob, low-cost, reliable US energy — combined with the country's technology leadership — is the competitive advantage that will determine whether the US wins the global AI race.