SINGAPORE, July 9 (Reuters) – Asian investors are taking a cautious attitude towards artificial intelligence as they increasingly bet on companies that can withstand AI-driven disruption and look for companies that can benefit from applying the technology.
As global markets soar to record highs on all the AI push, investors are starting to question whether this rapid profit growth can be sustained and whether massive spending on infrastructure will yield big returns.
The skepticism was also on display at the Reuters Next Asia event in Singapore, where managers from major funds spoke about the challenges they face in building portfolios in the age of AI.
Rohit Sipahimalani, Temasek’s chief investment officer, said Singapore’s state-backed investors are looking to expand their investments in AI, adding: “We definitely want to ride that trend.”
“But an equally big issue is the disruption by AI to many other businesses…We have increased exposure to businesses around hard assets that are less likely to be disrupted by AI,” Sipahimalani said in an interview at the Reuters NEXT Asia event in Singapore on Thursday.
Temasek, which owns shares in Anthropic and OpenAI, announced on Wednesday that it aims to significantly increase its investments in AI companies, increasing its exposure to the technology from the current 6% to up to 15% over five years.
“We have to look at the entire value chain,” Sipahimalani said. “There are areas where there is bubbles and there are areas where there is real cash flow.”
“We try to play across the spectrum,” he said.
Investors bet on AI picks and shovels
Investors have long been skeptical of the astronomical rise in AI and semiconductor stocks, and are wondering if a new speculative bubble is on the horizon, with valuation spikes and crashes becoming increasingly common.
Some are starting to look further down the value chain as the place to be. For Stephanie Hui, head of private and growth equity Asia Pacific at Goldman Sachs Asset Management, investment goals are not that complex.
“I’m not smart enough to say today which applications will win. It’s too early,” Hui said during a panel discussion at the event, adding that her company is investing in companies specializing in liquid cooling and data centers.
“We’re not aiming for a front end at this point…we’re aiming for something simple that facilitates an end proxy for AI deployments,” she said.
Investors say AI remains a major theme in the market, but there are concerns about the scale of spending, the type of returns ultimately seen, and an AI bubble.
“I strongly believe in the AI revolution, but as more and more capital is poured into AI, valuations continue to rise, raising the question of how much is enough,” said Fred Hu, chairman of China’s Primavera Capital Group, warning of overheating in the market.
Bain Capital Japan’s Satoshi Ueyama said there are plenty of investment opportunities, but cautioned that end users are needed for investments in AI infrastructure to make sense.
Ueyama said his company’s focus is on identifying AI-powered winners, such as in the services and consumer applications space.
“AI is real, but at the same time there is no denying that some parts of the market are overly excited…not all AI investments will be successful at this stage,” he said during a panel discussion in Singapore.
Watch the World Stage live coverage and read the full summit here.
(Reporting by Ankur Banerjee, Fanny Potkin, Kane Wu, Lei Wee, Yantortra Nguy, Lucille Dutta, Sumeet Chatterjee and Jun Yuan Yong in Singapore; Writing by Ankur Banerjee; Editing by Christopher Cushing)
