Australia’s construction sector is experiencing a boom, driven by the rapid development of data centres to support artificial intelligence. Investment in Australian data centres doubled to a record $2.8 billion in the September quarter, according to the Australian Bureau of Statistics. This surge is attributed to the country’s relatively cheap land and abundant energy resources.
ASX investors are exploring various strategies to profit from this trend. NextDC, a company that builds and operates data centres, is constructing a $7 billion facility for OpenAI. Goodman Group, known for its industrial property empire, has also shifted towards data centre development. These companies are seen as benefiting from the increasing demand from hyperscale cloud service providers such as Microsoft and Google. Wilson Asset Management highlights the tight market conditions with high demand and limited supply, positioning these companies favourably.
However, despite the rapid investment, share prices of NextDC and Goodman Group have decreased by over 10 per cent in the past year. Some investors are turning their attention to the energy sector and infrastructure contractors, anticipating increased demand for electricity and maintenance services. Companies like Worley, Downer EDI, and Ventia are being considered as potential beneficiaries. Other options include technology companies like Bravura Solutions, Kinatico and Iress. Santos, an energy giant, is also favored by some investors.
Beyond the direct beneficiaries, fund managers are also examining companies further down the supply chain. Sims Ltd, a recycling company, is profiting from the recycling of rare metals used in AI hardware. Additionally, companies with extensive first-party data, such as Commonwealth Bank, Woolworths, and Wesfarmers, are expected to benefit from their ability to leverage data centre infrastructure. Macquarie Group is also recognised for its early investments in data centres, positioning it as a key player in the evolving landscape.
