This is a thinking out loud question and apologies if it has been tackled previously; or it just isn't an interesting question or thought to many.
I can't really escape the thought that, regardless of whether you consider AI a bubble, new industrial age or somewhere in between. It is difficult to look past two constants.
(1) AI attracts vast capital and funding, (2) AI is being willed to succeed on a rapid timeline.
With this is mind, my question remains - where does the money actually go ?
I think in very layman terms, AI is a bet. That bet is being willed to succeed, arguably defying rational, meaning there has to be some unlikely winners along the way. I have read different positions, but generally 50p-70p of every £1 is put towards physical infrastructure. I work in construction too, hence my interest.
A lot of infrastructure businesses are not glamorous but they are necessary to carve out the relevant landscape, the companies actually receiving capital in exchange for their goods and services.
I think an investment pie that consists of the following sectors may benefit from funding cascaded down from the large AI companies : -
\- Energy and Power Infrastructure - GEV, CEG, EQNR - the first two are not value plays but I think Equinor is interesting as I believe that sovereign wealth funds will be well placed to develop infrastructure and they benefit from their own sound capital provisions.
\- Grid & Electrical Equipment - ETN, SU, VRT - quite simply, someone has to create the gear to run data centres and these businesses benefit from multi-year contracts (jam today). No value plays from what I have listed, so interested to hear what other businesses would fall into this category ?
\- Construction Operations and Construction Equipment - PWR, FIX, STRL, CAT - again, first two are not value plays but Sterling Infrastructure appears less discovered in this climate. I also say CAT, but construction plant generally may benefit from long orders and multi-year and phase construction projects. Those traditional construction plant businesses as also give you somewhat of a global hedge as they are necessary everywhere.
\- Renewable Energy Businesses - GRP.L - Irish renewable energy infrastructure company - partly linked with my sovereign wealth theory.
\- Infrastructure Finance and Developers - ARES, OWL, BAM - first two are not value plays, BAM is well regarded in these forums, a bricks and mortar owner and financier.
\* - Legal - now I am starting to think legal businesses - both in litigation and contract preparation.
I would be interested to know people's thoughts and any businesses that they think would slot in nicely into these elemental sectors/branches ? And obviously I have tried to be honest with items which are clearly not value plays, I am just hoping it sparks some discussion and suggestions for less-regarded businesses with potential upside.
My other thought on sovereign wealth funds and the benefiters to their spending is interesting to me.