Many investors continue to hold big positions in semiconductor equities, despite a sector collapse in July when questions arose about whether AI spending was worthwhile and the threat of increased Chinese competition. At the same time, they are adding exposure to hyperscalers, which are the largest cloud service providers with the ability to rapidly grow AI infrastructure to meet customer demands.
Brian Barbetta, co-head of the technology platform at Wellington Management, which manages about $1.3 trillion in assets, stated that hyperscalers are currently being recognized as companies that are likely to be very large beneficiaries of this AI paradigm shift. “They remain core holdings in our portfolios, and we have recently increased our positioning in many of these companies.” According to John Lamb, equities investment director at Capital Group, which manages over $3.6 trillion in assets, investors should think of AI as a developing ecosystem.
It doesn’t matter whether chips are better investments than hyperscalers. It’s important to have both in your portfolio,” he added, noting that data centres normally take 12 to 18 months to transition from construction to revenue. We’re just starting to witness this tipping point in the recent quarterly earnings.
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