Investors Look for More AI Exposure

Artificial Intelligence (AI) & Digital Infrastructure - AI is having a profound impact on markets, with themes displacing sectors in explanatory power [3][4] - The industry is in the build phase of AI, seeing hundreds of billions of dollars in capital expenditure to build better and more scalable models [5][6] - Many investors lack direct exposure to AI beyond the "MAG seven" (likely referring to a group of major tech companies), leading to intentional allocation towards digital infrastructure, power infrastructure, applications, and data owners [8] - The industry anticipates continued breakthroughs in AI intelligence, moving from "college level" to "master's degree level," which should boost adoption [17] Capital Expenditure (CapEx) & Investment Trends - Top four infrastructure builders, combined with energy and utilities companies, have CapEx equal to the rest of the S&P 500 combined [2] - Significant investment is flowing from semiconductors to energy and power sources, providing ballast to these stocks [3] - There's $2.2 billion of interest in the ticker AI [6] Geopolitical Fragmentation & Onshoring - Geopolitical fragmentation explains market movements since April, particularly in infrastructure and defense [5] - Onshoring into America and re-industrialization are interesting subthemes, especially regarding real estate and construction of data centers [9] - US infrastructure names are favored, as building semiconductors and high-end technologies like EVs requires roads, highways, airports, ports, electricity, and waterways [10] - Semiconductor equipment manufacturers are a high-upstream way to play more semiconductors being built in the US [11] - Diversification into monetary alternatives like gold is expected to be a big trend through the end of the year [18] Currency & International Exposure - TSMC, a Taiwanese company booking revenue in US dollars but operating in Taiwanese dollars, illustrates currency exposure for American investors [13] - Dollar weakening has boosted international stocks, leading investors to allocate to international ETFs [14] - Currency will be an important factor in explaining earnings this season [15]