Stan Wong: Tech and AI are under pressure. Is the market missing the bigger picture?

Résumé détaillé

The recent selloff in technology and artificial intelligence-related equities has raised questions about the durability of the AI infrastructure investment cycle.

The recent selloff in technology and artificial intelligence-related equities has raised questions about the durability of the AI infrastructure investment cycle.

Political uncertainty, escalating capital spending and concerns over investment returns have contributed to the correction. Yet market sentiment appears to have deteriorated more rapidly than the underlying demand for computing capacity.

At their respective lows during the recent correction, the Nasdaq-100 had fallen nearly 15 per cent from its previous peak, while the Philadelphia Semiconductor Index had declined almost 39 per cent from its June high.

Democratic victories in U.S. Congress and growing opposition to data-centre development have heightened concerns over regulation, electricity costs and permitting. Hedge fund deleveraging and the unwinding of crowded AI positions have further amplified the selling.

These risks warrant scrutiny. But short-term disruptions to individual projects should not be confused with a breakdown in the structural forces driving this global investment cycle.

AI infrastructure is not exclusively an American growth story. Hyperscalers are expanding computing capacity across Asia, Europe and the Middle East as businesses and governments accelerate AI adoption.

Microsoft, for example, announced US$10 billion of investment in Japan through 2029, covering AI infrastructure, cybersecurity, and workforce development, alongside plans for more than US$10 billion of capital and operating spending across the Middle East through 2030.

The International Energy Agency projects global data-centre electricity consumption will nearly double, from 485 terawatt-hours in 2025 to 950 terawatt-hours by 2030.

This expansion points to substantial demand for semiconductors, power generation, cooling systems, and electrical infrastructure. U.S. political developments may influence where and when investments occur, but they do not eliminate the need for computing capacity worldwide.

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