The AI revolution is creating a market boom, with investors looking for opportunities in different sectors beyond obvious choices like semiconductors. Tejas Dessai, Assistant Vice President and Research Analyst, Global X ETFs, joins “Asking for a Trend” to share his views on AI investing.
Desai describes the AI trade as a “moment of mass disruption” and highlights the technology's impact and influence on the global economy. He draws parallels between the development of AI and the internet, suggesting that the market is currently in the “infrastructure build-out phase,” with semiconductors being the primary focus of investment.
But Desai “expects AI-related investment opportunities to grow aggressively,” and he advises investors to look at three areas: data centers, cloud software and applications, and energy businesses, particularly uranium and copper.
For more expert insights and the latest market trends, click here to watch the full episode of “Asking for A Trend.”
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Video Transcript
The rapid rise of artificial intelligence is creating a tailwind for chip providers.
According to Global X, by the end of the century, compound annual growth rate of annual I-chip spending is expected to exceed 30%.
But semiconductor manufacturers aren't the only ones that stand to benefit from the AI explosion. Former Vice President and Research Analyst at Theos Deai Global joins me now.
Mr. Theos, we're glad to have you on the show.
Well, when we talk about I teos here, let me ask you a question.
As you know, this is probably one of the hottest trends among investment traders and investors.
They want to learn about it, study it, and find ways to play it.
Does all this frenzy make sense to you, or do you think we're getting ahead of ourselves a bit?
absolutely.
Well, Josh, great to have you here.
Well, when it comes to the broader impact of artificial intelligence on the global economy, I think we view this as a moment of massive disruption.
In fact, it's a lot like the Internet itself.
Um, you know, this is where we're going to be able to build new experiences and new products and services.
And now we are at the infrastructure building stage in the semiconductor business opportunity.
And I think that has worked out very well for investors across the board. Over the last 12 months or so, a lot of it has been driven by the media and a few select stocks.
But we expect it to expand aggressively as investments in this basic infrastructure go ahead.
And I think this is a really good time to think about the gains you've made so far.
So let's say you learn about NVIDIA, you learn about these companies, you learn about big tech companies in general, and then you start really thinking about where else are you seeing this growth over the next 18 to 24 months?
And that's a big part of the conversations we have with our clients.
Well, looking across the universe, you know, we generally encourage investors to look at three specific areas when thinking about the next phase of growth with AI in particular.
You know, number one is the entire data centre and digital infrastructure value chain.
This isn't just about building big, giant processing facilities, but really closing the loop in terms of delivering these experiences to the end user as the use cases grow.
Second, we recommend that investors focus on highly attractive areas such as cloud software, cloud applications, cloud infrastructure, and cyber security.
And if you don't want to deal with this from a technology perspective, you should look at energy, such as uranium, copper and some other areas.
Uh, you know, there's this power-hungry movement forming across artificial intelligence in particular, and we've seen a tremendous uptick so far this year, and even later this year, this is a very investment destination.
So, um, let's take some pictures here.
For example, in the case of a data center, clients come to you and ask how they can leverage it.
What would you say to them?
absolutely.
Our approach is, um, you know, it's too early to decide on one or two options for this particular theme.
You know, this is going to be a very secular build.
I mean, if you look at the computing infrastructure that's currently powering the global digital economy around the world, we're talking about at least a trillion dollars worth of infrastructure, right?
Chips, network solutions.
Well, you know, these huge, super-large processing facilities around the world that house tons of memory storage.
So our approach is a very passive approach.
You know, we hold a data center and digital infrastructure ETF, and there's been a lot of discussion about that in general.
Um, but what we do expect is a long-term build that will lead to increased cap capacity.
And that will likely translate into opportunities for many data center companies, and the companies that provide the components that go into those data centers, to grow revenues at a much faster pace than the market is currently pricing in for copper.
That's interesting.
Why is copper the way to play the AI theme?
If you're interested, how do you play it?
Do you only buy red metal?
absolutely.
So, you know, copper generally correlates very well with economic expansion.
So essentially, if you're building out any huge data center capacity — if you're building out any data center facilities — and also as we get closer to the electrification of automobiles, or just generally now, infrastructure upgrades are going to play a key role.
You know, we're investing in the power grid.
We are investing in transmission facilities.
All of this basically requires copper, which, as you know, is in a very important position. Copper prices have been on a long-term upward trend for a while now, but the price has certainly come down and I think that presents an interesting trend for investors to consider.
Well, let's consider the product as a whole.
Uh, so again, we offer a copper mining ETF here by, um, COPX cop choice.
But it has been a very popular product for us so far this year.
Um, but generally, um, again, um, we're seeing copper trading pick up in the United States and other commodities that we've got here pick up as well.
So again, yeah.
I think now is the perfect time to take a step back and think.
Imagine if you had the backing of NVIDIA and other big tech companies to ride the wave of AI in the market.
Really?
Let's take a step back and think about this.
Where else can you find this growth opportunity?
And, you know, there are a lot of undervalued areas that investors should be looking at in Taos.
It was a great chat.
Interesting choices and strategies.
We are delighted that you have joined.
absolutely.
thank you.
