Despite concerns about a potential bubble forming in artificial intelligence (AI) stocks, some of Australia’s largest technology investors are using the recent market dip to increase their exposure to the sector. The tech-heavy Nasdaq experienced a downturn earlier this month, sparking fears that the rapid rise in AI stock valuations mirrored the dot-com boom and bust era. However, firms like Munro Partners have taken advantage of the billions wiped off the market as a buying opportunity, a move that has already seen returns as the Nasdaq swiftly rebounded.
Munro Partners, managing a $1.7 billion Global Growth Fund, has increased its stakes in Nvidia, Alphabet, and Taiwan Semiconductor. According to Munro’s chief investment officer, Nick Griffin, the correction was healthy, addressing frothy areas like quantum computing and crypto. Munro Partners is a global investment manager. They focus on identifying and investing in companies that are benefiting from long-term structural growth trends.
While Munro sees value in established tech giants, other firms are more cautious about speculative areas within the AI sector. Loftus Peak is wary of neo-cloud providers, which offer graphic processing units as a service. Ziller Funds Management is avoiding AI stocks that aren’t currently generating value from their substantial capital expenditure, focusing instead on companies showing immediate returns on investment. Ziller Funds Management invests in high-growth companies. They specialize in founder-led businesses.
However, not all fund managers are convinced. GQG Partners remains sceptical, warning that the rally in tech stocks is creating a bubble larger than the dot-com era. GQG has expressed concerns about the sustainability of OpenAI’s business model, citing high capital intensity and growing competition. GQG’s shift away from tech stocks has impacted its performance, with its Global Equity Fund underperforming its benchmark this year.
