The anticipated capital influx from SpaceX, Anthropic PBC, and OpenAI is poised to ignite a new wave of technology investment, significantly benefiting Asian hardware firms. This development could catalyze the next phase of a historic rally in Asian stock markets, particularly for companies involved in server components and power equipment.
Hardware companies in Asia have already reaped substantial benefits from the data-centre expansion, with chipmakers like Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co., and SK Hynix Inc. joining the trillion-dollar club. However, as valuations soar, investors are shifting focus to a new class of potential market leaders. Ken Wong from Eastspring Investments highlights the potential for AI IPOs to further drive capital expenditure, while his firm currently underweights semiconductors in favor of electronic component makers.
The listings of SpaceX, OpenAI, and Anthropic could add $70 billion in AI spending, supplementing the over $750 billion already committed by major hyperscalers, according to Fabien Yip of IG International. This influx is expected to broaden the trade in Asia, with companies like Samsung Electro-Mechanics Co. and Japan's Ibiden Co. performing well on MSCI Inc.'s Asia equity index. The AI demand is causing semiconductor shortages, and supply chain bottlenecks are emerging, prompting investors to explore opportunities beyond the largest chipmakers.
“AI IPOs could further fuel the capex boom at a time when Asian chip stocks look stretched.”
Ken Wong, Asian equity portfolio specialist at Eastspring Investments Hong Kong Ltd.
Sam Konrad from Jupiter Asset Management sees potential in Taiwan's Hon Hai Precision Industry Co. and Quanta Computer Inc., as well as chip designer MediaTek Inc., as the AI capex cycle is expected to last several years. BNP Paribas Asset Management's Song Zhe emphasizes the importance of stock-specific strategies, focusing on advanced packaging and server-related companies in Taiwan and China.
Beyond traditional AI applications, investors are exploring areas like robotics and self-driving vehicles, with Nvidia Corp.'s initiatives boosting partners like LG Electronics Inc. Power supply is also a critical area, with nuclear and alternative energy gaining attention as data centers proliferate. Companies like HD Hyundai Energy Solutions Co. and Daewoo Engineering & Construction Co. are leading in South Korea, while Adani Group's green-powered data centers are notable in India.
“The flow-through to Asia is prominently visible in the latest chipmaker earnings reports.”
Fabien Yip, market analyst at IG International
Background
The technology sector in Asia has been experiencing a significant boom, driven by the rapid expansion of data centers and the increasing demand for semiconductor components. This trend has been further amplified by the global shift towards AI technologies, creating new opportunities and challenges for investors.
The upcoming capital raisings by SpaceX, OpenAI, and Anthropic are seen as a positive signal for continued investment in AI stocks, according to Brian Ooi of Swiss-Asia Financial Services. He highlights the importance of power-related equipment in this context. As these companies secure more liquidity for capital expenditure, Asian suppliers stand to benefit significantly.
