Anthropic, OpenAI IPOs could fuel growth for Asian tech suppliers
What's the story
The upcoming wave of stock offerings in the US could be a boon for Asian supply chain companies. The massive capital raised by tech giants like SpaceX, Anthropic, and OpenAI is expected to spark a new cycle of technology spending. This could greatly benefit manufacturers of server components, specialty materials, cooling systems, and power equipment.
Market impact
AI IPOs could further fuel capex boom in Asia
The anticipated technology spending from US AI IPOs could further boost capital expenditure (capex) in Asia. This comes at a time when some investors are wary of high valuations in the semiconductor sector. Ken Wong, an Asian equity portfolio specialist at Eastspring Investments Hong Kong Ltd., said "AI IPOs could further fuel the capex boom at a time when Asian chip stocks look stretched."
Financial forecast
SpaceX, OpenAI, Anthropic listings could add $70 billion in AI
The upcoming listings of SpaceX, OpenAI, and Anthropic could lead to an additional $70 billion in AI spending. This is on top of the over $750 billion already committed by major hyperscalers. Fabien Yip, a market analyst at IG International, said "the flow-through to Asia is prominently visible" in the latest chipmaker earnings reports.
Market shift
Asian chipmakers already reaping AI benefits
Asian chipmakers have already started reaping the benefits of AI, with strong pricing power amid new demand leading to severe semiconductor shortages. The trend is now being witnessed further down the supply chain and could worsen with more capex funding. Sam Konrad, a portfolio manager at Jupiter Asset Management, sees potential in Taiwan's Hon Hai Precision Industry Co., Quanta Computer Inc., and MediaTek Inc.
Energy focus
Power supply emerging as critical area
As data centers continue to grow, power supply is emerging as a critical area. Nuclear and alternative energy are being looked at for their potential. Adani Group's investment in green-powered data centers is boosting its energy units in India. Jian Shi Cortesi, a fund manager at Gam Investment Management, sees power as "the most under-owned bottleneck," but warns of potential risks if AI demand doesn't justify spending levels.