Investors may need to be patient before they see tangible benefits emerge from the AI boom, a portfolio manager said.
Speaking at a Bennelong Funds Management press conference last week, Sarah Shaw, investment director at 4D Infrastructure, warned that much of the “hot capital” flowing into the AI sector may not not stay long enough to take full advantage of it. investments.
“I look at it from the perspective of my own infrastructure, but there is a lot of hot money in [AI] …The problem we have with this is that this theme is exciting. We love it, it’s long term, it’s great, but it’s not this year. It’s not next year, it’s going to be three, four, five years before we see that data center development, before we see that load evolution,” Shaw said.
“We don’t know how this will translate into benefits. So, will this hot money sit around waiting for it to happen?
She pointed out that the United States is experiencing accelerated growth in data center development, leading to increased demand for electrical charging in various regions.
But hyperscalers – large-scale data center operators with power requirements exceeding 25 megawatts – are now facing wait times of two to seven years for additional supply to meet their operational needs. This highlights the significant challenges of scaling infrastructure to meet rapid technological and digital expansion.
“Resoundingly successful AI data centers require a huge amount of power. The forecast is great, like 6, 8, 8 percent,” Shaw explained. “But you won’t see 6–8 percent this year. You won’t see it next year.
In a recent outlook, sustainability portfolio manager Peter Aquilina highlighted the challenges of navigating future trends in the data center industry, citing rapidly evolving technological advancements and digital services as key complexities.
“While 4D is excited about the long-term infrastructure investment theme supported by expected data center growth, it should be noted that this growth in investment and/or demand will not immediately materialize in numbers. “, wrote Aquilina.
Explaining the point, he said it takes time to plan, locate and build data centers, and that time takes time in running production capacity, network connections and load demand .
“It must also be financed by investors through debt and/or equity,” Aquilina added.
“While supporting valuations, shareholders must be patient in realizing the opportunities offered. »
