The AI revolution has sparked a market boom, with investors seeking opportunities across various sectors beyond obvious choices like semiconductors. Tejas Dessai, Global X ETFs assistant vice president and research analyst, joins “Asking for a Trend” to share his insights on AI investing.
Dessai describes the AI trade as “a moment of mass destruction,” highlighting the technology’s influence and impact on the global economy. He draws parallels between AI and the development of the internet, suggesting that markets are currently in the “infrastructure buildout phase,” which makes semiconductors the primary investment focus.
However, Dessai “expects an aggressive broadening out” of AI-related investment opportunities. He advises investors to consider three specific areas: data centers, cloud software and applications, and energy plays, particularly uranium and copper.
For more expert insight and the latest market action, click here to watch this full episode of Asking for A Trend.
This post was written by Angel Smith
Video Transcript
The rapid rise of artificial intelligence providing a lift for chip providers.
According to global X, by the end of this decade, a compound annual growth rate of over 30% is expected for annual spending growth on a I chips.
However, semiconductor makers not the only ones standing to benefit from the A I surge teos deai global ex assistant vice president and research analyst joins me now.
Teos it is great to have you on the show.
Um, let me ask you when you talk about a I teos here.
You know, it is one of I mean, maybe the hottest trend in investment traders, investors.
They wanna learn about it, study it, they wanna find ways to play it.
Do you think all this enthusiasm teos Does it make sense to you or or do you think we’ve gotten a little bit ahead of ourselves here?
Absolutely.
Uh, Josh great to be here.
Uh, then I think we look at this as a moment of mass disruption when it comes to, uh, sort of the impact that artificial intelligence will broadly have on the on the global economy.
In fact, uh, you know, this is very much like the Internet itself.
Um, you know, enables new experiences and new products and services to be built here.
And currently we are in that infrastructure built out phase in that semiconductor opportunity.
And that is, I think, worked very well for investors across board For the last 12 months or so, a large part of it has been driven by media and a few select stocks here and there.
But we expect an aggressive broadening out as that as that investment as the dollar into this foundational sort of infrastructure goes, uh, goes about.
And I think you know, this is really a good time to think about, you know, the gains that you’ve had.
For example, if you’ve been exposed to NVIDIA, if you’ve been exposed to some of these names and even the big tech universe across the board and really start to think about, where else do I find this growth for the next 18 to 24 months?
And this is, uh, you know, large majority of the conversations that we’re having with our clients as well.
Um, And when you look at the universe, you know, we we generally, um, recommending that investors look at three specific areas, especially as they think about this next lap of growth with A I.
You know, Number one is obviously data centres and the entire digital infrastructure value chain right.
It’s not just about building these massive, gigantic processing facilities, but also really closing the loop in terms of bringing these experiences to end users as a I use cases expand.
Secondly, we encourage investors pay some attention to cloud software, cloud applications, cloud infrastructure as well as areas such as cybersecurity, which appear very attractive.
And if you don’t want to play this from a technology standpoint, then you should certainly be looking that energy, you know, uranium, copper as well as a few other sort of areas there.
Um, you know, especially as this power hungry dynamic forms for artificial intelligence across the board, but a very investable, uh, the here even in, uh in the second half of, uh, of this year, even though we’ve seen a tremendous rally so far this year.
So let’s, um, let’s get some pics here.
Let’s say data centre, your clients come to you, they want way to play that.
What do you tell them?
Absolutely.
Look, our approach is, um, you know, it’s It’s too early to have one or two picks to go with this particular theme.
You know, it’s it’s going to be a very secular build out.
I mean, if you look at the computing infrastructure that we have currently around the world that is powering the global digital economy, we’re really talking about at least a trillion dollars worth of infrastructure, right?
Chips, networking solutions.
Um, you know, a lot of, uh, memory storage that is housed in this massive, gigantic hyperscale, you know, processing facilities around the world.
So our approach really is take a very passive approach.
You know, we we, for example, have a data centre and digital infrastructure ETF that has been picking up a lot of conversations across the board as well.
Um, but what we anticipate is a secular build out that will result in cap capacity expansion.
And that will also likely translate in an opportunity for a lot of these, you know, data centre companies, as well as companies that provide the components that go into these data centres an opportunity to really grow their earnings at a much faster rate than what the market has baked into right now, copper.
Now, that’s interesting.
Why is copper a way to play the A I theme?
And if you’re interested, how do you play that?
Do you just buy the red metal?
Absolutely.
So, um, you know, copper generally is very well correlated with economic expansion.
So essentially, if you’re building gigantic data centre capacity if you’re building data centre facilities, right, if you’re also again, we have electrification of automobiles on the horizon, or generally just an infrastructure upgrade that is currently playing into the fold.
You know, we we’re investing in power grids.
We’re investing in transmission facilities.
All of that requires copper Fundamentally, which really positions that, um you know that that commodity in a very, uh, position here we’ve seen copper prices on a secular uptake for a while now, prices have certainly pulled back, and I think that presents an interesting dynamic for investors to consider.
Um, consider the commodity as a whole.
Um, again, we, uh, offer a copper miners ETF here, uh, by the picker of COPX cop.
But that has been a very popular product for us so far this year as well.
Um, but generally we’re seeing um, again, um, alongside copper conversations pick up in U and and some of the other commodity offerings that we are that we present here as well.
So again, right.
I think this is a perfect time to sort of take a step back.
If you have, uh, been riding this A I momentum in the markets in the back of NVIDIA on the back of some of these big tech names.
Really?
Take a step back and think.
Where else do I position to find this, uh, find this growth opportunity.
And And there are many, um, you know, undervalued areas that we we think investors should look at Taos.
Great chat.
Interesting picks and strategies.
Thanks for joining us.
Absolutely.
Thank you.
