SpaceX, OpenAI windfall fuels fresh bets on next-wave Asian AI winners

By Abhishek Vishnoi and Winnie Hsu

 

The hunt is on for companies that could benefit from the tailwinds of an unprecedented wave of stock offerings in the US, and investors are increasingly honing in on the Asian supply chain.

 

Their thesis is that the billions of dollars that SpaceX, Anthropic PBC and OpenAI are set to raise will kick off a fresh round of technology spending — with a good chunk of that finding its way to the makers of server parts, specialized materials, cooling components and power equipment. For stock markets in Asia, that could be the catalyst for the next leg of a historic rally.

 

 

Hardware firms in the region are already among the biggest winners of the data-center buildout, which has propelled chipmakers Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co. and SK Hynix Inc. into the trillion-dollar club. But after their breakneck gains, some investors have become uneasy about those lofty valuations and are now betting that the next phase will create a new class of champions.

 

“AI IPOs could further fuel the capex boom at a time when Asian chip stocks look stretched,” said Ken Wong, an Asian equity portfolio specialist at Eastspring Investments Hong Kong Ltd. “We’re currently underweighting semiconductors in our Asia technology strategy and focusing more on the electronic component makers.”

 

The battle for AI leadership has driven massive expenditures on computing networks by the likes of Meta Platforms Inc. and Amazon.com Inc. The pending equity offerings could provide some relief on market concerns over funding sustainability as debt levels rise.

 

The listings of SpaceX, OpenAI and Anthropic may mean a total of $70 billion in AI spending on top of the more than $750 billion already committed by the biggest hyperscalers, according to Fabien Yip, a market analyst at IG International. 

 

Broadening Trade 

“The flow-through to Asia is prominently visible” in the latest chipmaker earnings reports, she said. “As the AI rally matures, the broadening beyond pure-play names is underway.” 

 

Some of the region’s hottest stock trades have been makers of electronic components used in servers as well as providers of materials and techniques used in making semiconductors. South Korea’s Samsung Electro-Mechanics Co. and Japan’s Ibiden Co. are among the top performers on MSCI Inc.’s broadest Asia equity index this year. Among more far-flung plays, IG’s Yip highlights Japanese toilet maker Toto Ltd., which supplies ceramic materials for chipmaking equipment.

 

Asian chipmakers have reported windfall profits on AI, on strong pricing power as the new source of demand creates dramatic semiconductor shortages. Supply crunches are now starting to appear further down the supply chain, and the trend may deepen with the continued inflow of capex funding. 

 

Greater investor awareness of new bottlenecks has combined with technical factors to drive broadening of the AI trade beyond the biggest chipmakers. Given concentration risks and limits on how much funds can invest in single stocks, money managers are looking at where earnings are only beginning to reflect the scale of AI infrastructure spending.

 

Sam Konrad, a portfolio manager at Jupiter Asset Management, sees opportunities in Taiwan’s Hon Hai Precision Industry Co. and Quanta Computer Inc., which assemble servers, as well as chip designer MediaTek Inc.

 

“The AI capex cycle is going to last multiple years,” he said. “Investors are likely to look for companies that are direct beneficiaries, but that are still trading at low valuation multiples.”

 

BNP Paribas Asset Management’s Song Zhe said the next leg of the rally “should be stock-specific, not a blanket semiconductor trade.” His team is focused on advanced packaging, substrates, testing, optical connectivity, power, cooling and server-related companies across Taiwan and China “where earnings upgrades can still justify valuations.”

 

Others are investing in applications of AI beyond chatbots, in areas including robotics and self-driving vehicles. This burgeoning “physical AI” field has gotten a push from Nvidia Corp.’s efforts to develop related businesses, boosting shares of partners like LG Electronics Inc.

 

Power Supply 

The supply of power is seen as another key area. Nuclear and alternative energy have gained attention for their potential as data centers proliferate, especially as the Iran war drives up oil prices. 

 

Solar firm HD Hyundai Energy Solutions Co. and nuclear play Daewoo Engineering & Construction Co. are among the top stocks in South Korea’s world-beating market this year. Adani Group’s push into green-powered data centers is driving gains in its energy units, providing India with one of its few AI bets.

 

Jian Shi Cortesi, a fund manager at Gam Investment Management, sees power as “the most under-owned bottleneck,” but cautions that the next phase of the AI frenzy may carry bigger risks than the first. If AI demand fails to justify the scale of spending, companies may cut capex and leave the market facing excess infrastructure and sharp valuation declines.

 

Brian Ooi, a portfolio manager at Swiss-Asia Financial Services Pte., sees the SpaceX, OpenAI and Anthropic capital raisings as a positive signal to remain invested in AI stocks. He also likes power, with particular interest in transformers, fuel cells, cables, gas turbines and other equipment.

 

The three big AI-related IPOs “will provide them more liquidity to further invest in capital expenditure, and they have significant spending plans in place,” he said. “Asian suppliers will benefit.”