Investment Strategies in Technology and Infrastructure Sectors

Investors should explore underappreciated sectors like cooling services and utilities during the CapEx build phase.

### Investing in the Future: Navigating AI and Infrastructure Opportunities
* 🔍 The transition from CPUs to GPUs in data centers is a significant investment, with costs expected to **reach into the trillions** as power demand **doubles in the next 3 to 5 years**.
* 💡 This shift presents a unique investment opportunity in infrastructure, particularly in **digital and power sectors**, as companies seek to **enhance efficiency and productivity** while managing potential **inflationary pressures**.
* 📊 Investing across various sectors, including infrastructure, AI applications, and technology management, is essential to **capture diverse opportunities**, especially in data-heavy industries where valuations may not yet **reflect true potential**.
* 📉 Despite the long-term belief in AI's transformative power, there is a cautionary note regarding short-term performance, particularly with **high expectations for technology stocks trading at an average multiple of 32 times**.
* 🌍 Global investment opportunities are emerging, particularly in regions like **Asia Pacific and Europe**, where data center infrastructure is still developing and offers **more attractive valuations** compared to the U.S. market.
* 💼 The focus on utilities and cooling services for data centers highlights **alternative avenues for investment that are currently undervalued**, suggesting a **broader perspective is necessary** in the evolving market landscape.
* ⏳ While the monetization of AI technology may take time, projected revenue growth could **reach a trillion by 2027**, emphasizing the importance of **patience and strategic positioning** in investment decisions.

Your view more broadly than just one single stock. But the play that is so key to Tesla and so key to the market, and we still question it. Well, I think there's a couple of things to think about. We are strong believers that this is early innings, and it's a long term, medium term, hugely disinflationary, will bring great efficiency and productivity benefits. But near term, let's just look at some of the facts here. The Hyperscalers are having to spend billions of dollars, probably will go into the trillions, we're doing, you know, a one-time shift from CPUs to GPUs for extending datacentre capacity. But we also have to build power, power not just for gen AI, but, you know, we just touched on autonomous vehicles and power demand. Looks like it's going to double over the next 3 to 5 years. These are huge, huge numbers, huge CapEx investment. So it may be near-term that actually

this investment and CapEx, which by the way, we think is an interesting investment opportunity in infrastructure. But this investment in CapEx and maybe shortages that it can bring near-term if the monetization doesn't come as quickly and could bring some inflation as well. So where in the stack does one invest? Do you go still picks and shovels, chips, do you go infrastructure when it comes to energy? Do you go to applications of AI? We think you go a little bit to all of them. So first of all, we are invested in infrastructure. We think it's super interesting digital infrastructure and power and the combination we think we can earn equity-like returns are essential services, less correlation to the market with some great counterparties here and with revenue escalation and inflation protection over time. That's a pretty powerful story. But we also have investments at the other end of the spectrum with venture companies that are doing some things that are incredibly disruptive.

We think there will be winners and losers from Jenn-air, and we want to make sure we have exposure to that as well. And then finally, we have a specialist technology manager because that allows us in the public markets to look where Jenn-air is not yet priced in. And I would say all valuations, particularly in data-heavy industries, DNA is not priced in today, and there's some really interesting opportunities there. Nancy, the problem for our Bloomberg Technology audience, if they're just tuning in, is that Tesla is down 5% on a dataset that comes out once a quarter, even though if there's that big body of people that believe in this long-term story, that's very analogous with what you've just outlined. I think I'm right in saying that Alt has some small exposure to Tesla, but use that as a case study. What wins out here, this multi-year horizon belief in AI or the short-term pain of having to get there?

Well, we have a strong view that technology may underperform a little bit here. There are very high expectations. These stocks are trading at pretty high multiples, 32 times on average, you know, for the Magnificent Seven. And meanwhile, the Fed and other central banks in the world are easing interest rates, which we think will help the other 493 shares, which trade at more attractive valuations and with the easing, should support earnings growth going forward. So, there are things to do in the market. You don't just have to play technology at the moment to benefit from what's happening with the soft landing and the Fed easing. And as I said, we think it's going to be a little time here for monetization to take hold. Maybe it's 26, maybe it's 27. You know, Bain believes, you know, by 27 we'll see a trillion in revenue. Let's see.

But it's going to take more time. And remember, in the enterprise, when you use Jenn-air, it's not like the consumer. You have to embed it in business processes. You have to industrialize it. You've got to make sure that it doesn't have cyber threats and so on and so forth. So this all takes time. So, you know, a note of caution here near-term on Gen AI, we can do other things in the marketplace and benefit from the digital picks and shovel build while we're waiting. But we do ultimately think it will be transformational. Nancy, is there a corner of the technology sector that is underappreciated by investors? I think beyond the Magnificent Seven, as you look more broadly, you know, two other companies that will participate, you know, in video is not going to be alone here. Maybe it's a winner-take-most as opposed to a winner-take-all.

So there will be competition. There are other companies that also benefit. You know, think about data centers. They need cooling. So, you know, there are industrial companies that are providing cooling services to data centers that trade at really attractive valuations. So there are other ways of playing gen AI in this infrastructure. Then take a look at utilities, probably one of the best-performing sectors year to date. Who would have thunk it? Right? So there are other ways to think about this. You just have to think more broadly where is generally not priced in, particularly in this period where we're in the CapEx build, the monetization will take some time. And at the moment, I think investors may be getting ahead of what may be delivered next quarter. What about where it's underpriced globally? Nancy, I think of the latest news it will go into a little bit later about KKR looking to take private a Hong Kong-based or traded chip company.

What about global exposure? Well, I think there's some really interesting things happening globally. You might have seen as well something like Blackstone just did a $16 billion deal in Australia called Air Trunk, which is the largest Asia Pacific data center. You know, Europe is further behind the US build, Asia Pacific is further behind the US bill. So we think in our national exposure to data center infrastructure, power and build-out is a hugely interesting opportunity. They are much further behind the United States, and prices are more reasonable on a relative basis. So yeah, there are opportunities here beyond the United States, and they are internationally.

GenAI Monetization Will Take Time: AlTi Tiedemann

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Bloomberg Technology

The Impact of AI and Infrastructure Investment

The transition from CPUs to GPUs in data centers is driving a massive increase in power demand, which is expected to double in the next 3 to 5 years.

This shift is leading to significant capital expenditure (CapEx) investments, potentially resulting in short-term shortages and inflation.

The investment strategy includes diversifying across infrastructure, energy, and disruptive venture companies to capture equity-like returns and provide inflation protection.

Winners and Losers from Jenn-air's Impact

Jenn-air's influence is expected to create both winners and losers, with a specialist technology manager helping to identify undervalued opportunities in the public markets.

The high valuations of technology stocks, particularly the "Magnificent Seven," may lead to underperformance, while the easing of interest rates is expected to support earnings growth for other shares with more attractive valuations.

The timeline for monetization and significant revenue growth in the tech sector is projected to take until 2026 or 2027.

The Time-Consuming Impact of Gen AI in Business

Implementing Gen AI in enterprises requires time and careful integration into business processes to address cyber threats and other challenges.

While waiting for its transformational impact, companies can benefit from related digital services and infrastructure.

Underappreciated sectors, such as data center cooling services and utilities, offer attractive investment opportunities related to Gen AI's growth.

Global Opportunities in Data Center Infrastructure

Blackstone's $16 billion deal for Air Trunk in Australia highlights the growing importance of data centers in the Asia Pacific.

This region is lagging behind the US in terms of infrastructure build-out, presenting a unique investment opportunity.

The relatively lower prices in these international markets further enhance the potential for growth in data center infrastructure.