Geopolitical tensions, persistent inflationary pressures and elevated energy costs continue to cloud the global economic outlook, but the artificial intelligence (AI) investment boom is emerging as a powerful force supporting global growth, according to Principal Asset Management.
The global asset manager said the AI investment cycle has evolved into one of the largest infrastructure build-outs in modern history, helping to sustain economic resilience despite an increasingly uncertain macroeconomic environment.
While the initial gains from AI spending were largely concentrated among major U.S. hyperscale technology companies, the benefits are now spreading across the global supply chain, creating investment opportunities well beyond the technology sector.
Seema Shah, Chief Global Strategist at Principal Asset Management, said the United States remains at the centre of the AI expansion, but its impact is increasingly being felt across global markets.
“While the U.S. remains at the center of this trend, the benefits are spreading through global supply chains.”
She noted that South Korea and Taiwan have emerged as major beneficiaries due to their critical roles in supplying advanced semiconductors to leading U.S. hyperscalers.
According to Principal Asset Management, capital expenditure by hyperscale cloud service providers is projected to exceed US$1 trillion by 2027, reinforcing the AI ecosystem as a significant long-term driver of global economic growth.
The firm said the continued expansion of AI infrastructure is generating positive spillover effects beyond semiconductor manufacturers, with opportunities increasingly emerging across sectors, regions and asset classes that support the development of AI-related infrastructure.
However, Shah cautioned that investors should remain selective as valuations of AI-related companies have risen significantly following the sector’s strong performance.
“Investors should not ignore the risks. Valuations in AI-linked sectors have risen sharply, increasing the importance of selectivity and active management.”
Despite these concerns, she believes the broadening adoption of AI technologies is expanding the universe of investment opportunities, making diversification more important than ever.
“As AI adoption accelerates, the opportunity set is broadening across sectors, regions and asset classes, making diversification increasingly important to capture growth opportunities. As the AI cycle matures, success may depend less on identifying a single winner and more on gaining exposure to the broader ecosystem of beneficiaries.”
Principal Asset Management added that investors seeking long-term exposure to the AI theme should look beyond individual technology companies and consider the wider ecosystem supporting AI infrastructure, including semiconductor supply chains, data centres and other enabling industries.
The firm also noted growing investor interest in data centres, which have become a critical component of AI infrastructure. It said Sebastian Dooley, Senior Fund Manager for Real Estate at Principal Asset Management, is available to provide further insights into investment opportunities and challenges shaping the global data centre sector.
