Asian investors turn to AI "shovel sellers" and "anti-disruption" companies

As artificial intelligence (AI) propels global stock markets to repeated record highs, Asian investors are quietly shifting course. They are no longer blindly chasing all AI-related stocks but have begun to carefully select companies that are "dual-resistant"—those that can both benefit from the AI wave and withstand AI's disruptive effects. This cautious stance was particularly evident at the Reuters NEXT Asia event held recently in Singapore.

From Hype to Screening: Questioning Valuations and Returns

Global tech stocks have been surging for over a year thanks to the AI concept, but doubts are growing. The core questions are: Can massive capital expenditures translate into sustainable profit growth? Is the payback period for infrastructure investment overly optimistic? Asian fund managers have remained clear-headed. Rohit Sipahimalani, Chief Investment Officer of Singapore's sovereign wealth fund Temasek, stated bluntly at the event that while Temasek plans to increase its AI investment exposure from the current 6% to 15% over the next five years, "an equally important question is AI's disruption to many other businesses."

This disruption risk has prompted investors to reassess the resilience of their portfolios. Sipahimalani said Temasek has increased its allocation to "hard assets," which are less likely to be directly impacted by AI. At the same time, the fund still holds stakes in OpenAI and Anthropic, reflecting a balancing strategy between "tool providers" and "application adopters."

The Logic of the "Shovel Sellers": Focusing on the Midstream of the Value Chain

"You have to look at the entire value chain," Sipahimalani noted. "Some areas have bubbles, while others have real cash flows." This remark captures the common choice of Asian investors: betting on AI infrastructure—companies that serve as "shovel sellers" providing computing power, data, and energy for AI models.

Stephanie Hui, Head of Private Equity and Growth Equity for Asia Pacific at Goldman Sachs Asset Management, echoed similar views. She emphasized that investors should look downstream along the value chain for opportunities, such as data centers, chip manufacturing, and power equipment. These companies not only directly profit from AI deployment but also have relatively stable business models that are less likely to be quickly replaced by next-generation AI.

Beware of Bubbles: Frequent Valuation Corrections

The caution of Asian funds is not unfounded. Over the past few months, AI and semiconductor stocks have experienced sharp corrections multiple times, with growing market concerns about valuation bubbles. Sipahimalani acknowledged that "some areas have bubbles" but believes Temasek can balance risks through cross-sector allocation. He stressed that AI investment must "span the entire spectrum," from early-stage venture capital to listed tech stocks and physical assets.

Implications for Asia's Business EcosystemThis strategic shift has profound implications for the Asian business ecosystem. First, it indicates that capital is moving from pure AI concept hype to "hard tech" infrastructure with real cash flows, which will accelerate data center and energy project construction in Southeast Asia, India, and other regions. Second, the emphasis on "anti-disruption" attributes may drive family businesses and traditional manufacturing to seek paths of coexistence with AI, rather than simply embracing or escaping it. Finally, changes in asset allocation by regional institutional investors such as Temasek will serve as a bellwether for other Asian funds, further reshaping the regional technology investment and financing landscape.

Amid the great uncertainty brought by AI, Asian investors choose to vote with their feet: holding a "shovel seller" in one hand and a "ballast stone" in the other. This rational and pragmatic approach may be precisely the way for the Asian market to navigate through the technology bubble cycle.