Feature Stories | 11:00 AM
Artificial intelligence remains a polarising subject, but Australia is strategically well positioned to benefit. So, how should investors be positioned in the AI cycle?
- Data centres are only the stepping stone of Australia’s AI opportunity
- Productivity gains are emerging, but so too is workforce disruption
- What does history tell investors about how this latest tech cycle will mature?
- ASX poised to outperform when the cycle turns
By Danielle Ecuyer
Australia well positioned for data centre development
As articulated by Veteran macro investor and former hedge fund CIO Jordi Visser this week on his podcast, the S&P500 represents a “Bear Market Inside a Bull Market”, with markets increasingly driven by binary narratives, including commentary around artificial intelligence (new label: Super Intelligence!).
Visser points out there is a strong disconnect between record S&P500 earnings and the narrative from some market commentators that a “bubble” is waiting to burst.
What if the real story lays somewhere in between?
Like with many historical “general-purpose technology” (GPT) cycles, including electrification, computing and the internet, shareholder returns along the way can vary greatly.
This is also the premise for Macquarie’s deep dive into equity returns across prior GPT cycles and where the AI cycle is currently positioned.
Before detailing the machinations and strategic positioning for investors across the AI cycle, let’s look at the context around today's secular growth story.
Morgan Stanley considers AI infrastructure demand structural rather than cyclical, with global demand for AI compute expected to substantially exceed supply for years to come.
Australia should be in a good position to capitalise on the investment spend because of multiple strategic advantages, including membership of the Five Eyes alliance, data sovereignty requirements, a stable regulatory backdrop, as well as relatively easy access to advanced AI chips.
Morgan Stanley envisages domestic data centre capacity could grow to around 6GW by 2030 from 1.5GW currently. In the first quarter of 2026, data centre construction and server purchases equalled already around 17% of all private investment in Australia, the highest share on record.
Australia has scope to grow its data centres industry at an 18% compound average growth rate to 2030 and up to 27% under Morgan Stanley’s “bull case”, particularly against a projected -57GW shortfall in US data centre capacity over 2026-2028.
Currently, Australia is inside the global top five for installed capacity.
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