The AI stock carnage and data centres.
Hi Do you think the current negative sentiment and price falls in AI stocks could extend to data centre developers / operators? Regards, Carl
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Answer
Hi Carl,
A great question as we’ve already witnessed the selling in software stocks spread to tech in general and even uranium stocks on concerns around future power demand. The AI market worries have primarily been focused on the disruption that AI could have on established global software businesses, many of which were trading on high growth multiples.
The impact on data centre stocks has been more muted in the last fortnight, although the ASX names have been struggling over the last year, and the current moves do highlight how rapidly the space is evolving. e.g. Goodman Group (GMG) -18% and NEXTDC (NXT) -17%. Overall, we believe this “picks & shovels” sector of the AI revolution comes with lower uncertainty which should see more resilience to tech weakness, although when multiples contract in an area, it does have a negative influence across the board.
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Global X Data Centre & Digital Infrastructure ETF (DTCR US)
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Global X Data Centre & Digital Infrastructure ETF (DTCR US)
