Australian fund managers are increasingly looking beyond the ‘Magnificent Seven’ tech giants to find new winners in the artificial intelligence revolution. Funds that were early backers of companies like Nvidia, Apple, and Microsoft are now diversifying their investments. Melbourne-based Munro Partners, for example, has invested in Oracle, which provides database management systems, capitalising on the growing demand for AI computing power. According to Munro CIO Nick Griffin, Oracle has secured nearly $500 billion in bookings by aggressively pursuing OpenAI’s business, projecting a six-fold growth over the next five years.
Broadcom is another favourite, supplying AI hardware and achieving a trillion-dollar valuation. Griffin noted that Broadcom provides custom-built chips for companies like Google and is expanding its AI business significantly. Joseph Ziller of Ziller Asset Management highlighted software company Palantir Technologies, noting the impressive impact of AI on its financials. Palantir Technologies is a software company that specialises in big data analytics. Its stock has surged by over 300 per cent in the last year, prompting Ziller to increase his firm’s position after recent positive results.
Despite the enthusiasm for these emerging AI players, investors remain cautious about valuations. Lachlan Hughes of Swell Asset Management pointed out that while companies like Palantir may perform well, their high multiples could lead to rapid valuation declines if challenges arise. He suggests that more established players like Microsoft and Amazon, while potentially less exciting, offer greater dependability. Other less obvious AI plays include Axon Enterprise, known for tasers and body cameras, which is leveraging its extensive video data pool for AI and machine learning applications.
