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ASX GMG: These stocks are primed for ‘tectonic-sized’ tailwinds, writes Jun Bei Liu

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The magnificent seven are not the only way to play artificial intelligence, there’s money to be made in storage, energy and software on the ASX too.

A confluence of factors led to AI going from a fringe investment idea into the mainstream in record time – ChatGPT, for instance, reached 1 million users in just five days.At the broadest level, we think the investment opportunities of AI are in chips – used to power the process; storage – needed to house the enormous amounts of data processed; energy – used to power the infrastructure; and software – used to execute computer processes.

Australia, which is already a top five global data centre hub, is forecast to grow from 1GW today to more than 2.5GW during this time. Subpar investment in utility assets and long lead times for renewables, means we are likely to see sustained higher energy prices. Major utility businesses such as Origin Energy are well positioned to lead the market in investment in renewables and are beneficiaries of higher energy prices.None of these sub investment themes are any more or less important than the next. They are all part of a vertical value chain necessary for AI to grow and flourish.

Key components of a successful data centre include access to the grid, security of energy, connectivity and proximity to clients. With limited access to usable land that provides such access and long-term contracts for energy security, it is the incumbent data centre players that will continue to drive future growth.

Source: News Formal (newsformal.com)

 

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