The artificial intelligence revolution has sparked a market boom as investors look for opportunities in various sectors beyond obvious choices like semiconductors. Tejas Dessai, AVP and Research Analyst at Global X ETFs, joins “Asking for a Trend” to share his insights on investing in AI.
Dessai describes the AI market 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 development phase,” making semiconductors the primary investment target.
However, Dessai “expects an aggressive expansion” of AI-related investment opportunities. He advises investors to consider three specific areas: data centers, cloud software and applications, and the energy sectors, particularly uranium and copper.
For more expert insights 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 is giving chip suppliers a boost.
According to Global X, by the end of this decade, a compound annual growth rate of more than 30% is expected for annual growth in chip spending.
However, semiconductor manufacturers aren’t the only ones benefiting from the rise of AI. Joining me now is Teos Deai, Global’s former assistant vice president and research analyst.
Teos, it’s great to have you on the show.
Um, let me ask you when you’re talking about an I teos here.
You know, this is one of the hottest trends among traders and investors.
They want to learn more about it, they want to study it, they want to find ways to play with it.
Do you think all this excitement makes sense to you or do you think we’ve gone a bit overboard here?
Absolutely.
Uh, Josh, nice to be here.
Um, I think we see this as a moment of massive disruption in terms of the impact that artificial intelligence will have on the global economy overall.
Actually, uh, you know, it’s a lot like the Internet itself.
Um, you know, it allows us to create new experiences and new products and services here.
And right now, we’re in this phase of building infrastructure in this semiconductor opportunity.
And that has, I think, worked very well for investors as a whole. Over the last 12 months or so, a lot of that growth has been driven by the media and a few select stocks here and there.
But we expect to see an aggressive expansion of that investment as the dollar moves into this type of foundational infrastructure.
And I think you know, this is a really good time to reflect on, you know, the gains that you’ve made.
For example, if you’ve been exposed to NVIDIA, if you’ve been exposed to some of these names and even the big tech space as a whole and you really start to think, where else can I find this growth over the next 18 to 24 months?
And that’s, uh, you know, the vast majority of conversations that we have with our customers as well.
Um, and when you look at the universe, you know, we generally recommend that investors look at three specific areas, particularly as they think about this next stage of growth with AI.
You know, number one is obviously data centers and the whole digital infrastructure value chain, right?
It’s not just about building these massive, gigantic processing facilities, but also closing the loop in terms of bringing those experiences to end users as the use cases grow.
Second, we encourage investors to pay attention to cloud software, cloud applications, cloud infrastructure, as well as areas such as cybersecurity, which look very attractive.
And if you don’t want to play this from a technology standpoint, then you should definitely look at this energy, you know, uranium, copper and a few other types of areas out there.
Um, you know, particularly as this power-hungry dynamic forms for artificial intelligence across the board, but a very investable sector, uh, right here in the second half of this year, even though we’ve seen a tremendous recovery so far this year.
So, uh, let’s take some pictures here.
Let’s say it’s a data center, your customers come to you, they want a way to play there.
What do you tell them?
Absolutely.
Look, our approach is: uh, you know, it’s too early to have one or two choices for this particular theme.
You know, it will be a very secular construction.
I mean, if you look at the IT infrastructure that we have around the world today that powers the global digital economy, we’re actually talking about at least a trillion dollars worth of infrastructure, right?
Chips, networking solutions.
Um, you know, a lot of memory storage that’s housed in these massive, gigantic, hyperscale processing facilities all over the world.
So our approach is to take a very passive approach.
You know, we have, for example, a data center and digital infrastructure ETF that has also generated a lot of conversations across the board.
Um, but what we’re anticipating is a secular development that will lead to an increase in storage capacity.
And that will probably also translate into an opportunity for a lot of these data center companies, as well as the companies that supply the components that go into those data centers, an opportunity to really grow their profits at a much faster rate than what the market has priced in right now, copper.
Now this is interesting.
Why is copper a way to play the AI theme?
And if you’re interested, how do you play this?
Do you only buy the red metal?
Absolutely.
So, uh, you know, copper is generally very well correlated with economic expansion.
So, essentially, if you’re building out massive data center capacity, if you’re building out data center facilities, if you’re also doing that, we have the electrification of automobiles on the horizon, or more generally just an infrastructure upgrade that’s playing a role right now.
You know, we invest in electricity networks.
We invest in transmission facilities.
All of this fundamentally requires copper, which really positions this, uh, you know this commodity is in a very, uh, position here, we’ve seen copper prices have been on a secular uptrend for some time now, prices have certainly pulled back, and I think that presents an interesting dynamic for investors to consider.
Um, let’s look at the merchandise as a whole.
Uh, again, we’re offering here a copper miners ETF, uh, through the COPX cop selector.
But it’s also been a very popular product for us so far this year.
Um, but generally, we see uh, again, uh, alongside the copper conversations, picking up in the US and in some of the other commodity offerings that we’re showcasing here as well.
So again, it’s true.
I think this is the perfect time to take a step back.
If you’ve been taking advantage of this AI momentum in the markets through NVIDIA and some of these big names in tech.
Really?
Take a step back and think.
Where else can I position myself to find that, uh, find that growth opportunity.
And there are a lot of undervalued areas that we think investors should look at in Taos.
Great discussion.
Interesting choices and strategies.
Thank you for joining us.
Absolutely.
THANKS.
