Ben Powell, serving as the chief investment strategist for APAC at BlackRock, suggests that the wave of capital flowing into AI infrastructure has not hit its zenith. He noted that the primary beneficiaries are the providers of “picks and shovels”—spanning from chip manufacturers to energy firms and copper-wire suppliers—because hyperscalers are in a race to outspend each other.
The growth in AI-related capital investment seems relentless, with tech majors pushing hard to secure an upper hand in what they view as a winner-takes-all scenario, Powell conveyed to CNBC on Monday at the Abu Dhabi Finance Week.
“The capex expansion is underway. The financial outpouring is quite apparent,” he remarked, noting that BlackRock focuses on what he calls a “traditional picks and shovels capex super boom, which appears to have more potential.”
AI infrastructure has been one of the key forces behind global investment this year, fueling a wider market surge, even as some investors question the boom’s durability.
Nvidia, with its GPU chips at the heart of the AI wave, became the first company to temporarily achieve a $5 trillion market value amid a notable AI-fueled market rally, sparking conversations about a potential AI bubble.
Microsoft and OpenAI also finalized a restructuring deal in October to support the ChatGPT creator’s fundraising plans. According to Reuters, OpenAI has been preparing for an IPO possibly valuing the firm at $1 trillion.
This expansion has triggered long-term procurement actions across the tech industry, covering chip supply agreements and energy contracts. Grid operators from the U.S. to the Middle East are working to accommodate the increasing power needs from new data centers. Firms like Amazon and Meta have committed tens of billions of dollars annually to AI-focused investments.
S&P Global forecasts that data-center electricity demand might nearly double by 2030, mainly due to hyperscale, enterprise, and leased facilities, along with crypto-mining sites.
‘Dipping toes into credit market’
Powell also mentioned that significant tech firms are just starting to explore capital markets for financing the next phases of AI advancement, predicting a further influx of capital.
“The large corporations have only just begun venturing into the credit markets… it seems there is much more available to explore there,” he observed.
The “hyperscalers,” he noted, act as though coming in second would effectively eliminate them from the market. This mindset, he said, has led companies to escalate their expenditure, even at the risk of overshooting.
Much of that capital, Powell highlighted, is likely directed toward supporting companies rather than model developers, reinforcing the belief among global investors that the biggest profits from the AI surge may lie in the hardware, energy, and infrastructure sectors that support the technology.
“If we’re getting those cash flows, I think it’s a strong position to be in, whether manufacturing chips, generating energy, or producing copper wiring,” Powell commented, foreseeing “positive surprises boosting those stocks next year.”