The AI Investment Opportunity Most Investors Are Missing

During their recent episode, Taylor, Carlisle, Julien Albertini and Christian Heck discussed The AI Investment Opportunity Most Investors Are Missing. Here’s an excerpt from the episode:

[Julien] Which is why from an investment standpoint, we see very interesting opportunities in actually owning the picks and shovel of that infrastructure build out. And whether it’s memory or whether it’s owning, Christian mentioned earlier, Grupo Mexico, which is one of the largest copper miner globally. You need a lot of copper every time you build one of those data centres.

And copper is not very abundant. And if you look at the cheapest, highest quality copper mine, they tend to be in Chile, in northern Chile at the border between Chile, Bolivia and Peru. And Grupo Mexico own one of those incredibly large open pit mines.

It’s a very low cost on the cost curve. And so when you own an asset like that, you know, it will be needed. And when you see those hundreds of billions, trillions of dollars being spent in many ways, like copper or the memory guys are like a toll road on that spent.

And so I think from an investment standpoint, if you can own those assets at attractive valuation, that’s a very interesting propositions.

[Tobias] I think that’s Escondida in the Atacama Desert. We need eight more by 2030.

[Christian] Yes. To expand on Julian’s point, one way to participate in this build out, being agnostic of who wins it at the end of the day and participating at more reasonable prices, we have about a third of our portfolio in what you call real assets, which, you know, given the AI build out, but also given that we have entered sort of a multipolar geopolitical system with a big try for self-sufficiency, moving away from efficiencies, we have to go back to the periodic table and build some real structures.

And the U.S. market, you know, you’re asking earlier when or how would that K-shaped development sort of rectify itself. U.S. equity markets are not particularly exposed to this process of going back to the periodic table. And when you look historically, there’s cycles going back and forth. You go to the 1960s, you had the Nifty 50, which sort of represented the financial economy, the high-growing, high-flying stocks. In the 70s, we went back to the periodic table.

And, you know, the U.S. didn’t do so well, but stretched into the 80s. The 90s, the U.S. did incredibly well because you had the hot internet stocks. But then in 2000, with the rise of China, the ascension to the WTO, we went back to the periodic table.

In the 2010s, you had these U.S. mega internet companies do particularly well. But maybe we’re going to enter a decade where we’re going back to the periodic table. And historically, that has favoured international investing, specifically emerging markets.

And we definitely have a foot in the door there, as I mentioned, 30% or so of our portfolios have exposure to real assets, whereas in the S&P 500, that’s somewhere between 5% and 10%, depending on how you want to define it.

[Julien] That’d be great for your home country, Tobias, Australia, you know, very rich in natural resources. So if we go through another natural resources cycle, Australia will do very well. Good for Canada, too.