SINGAPORE — Top investment managers across Asia are proceeding with caution when it comes to artificial intelligence, increasingly placing their bets on businesses that can both profit from AI and survive the upheaval it brings to other industries.
While global markets have climbed to record levels on the strength of AI enthusiasm, some investors are now questioning whether the explosive profit growth can continue and whether the enormous sums being poured into AI infrastructure will deliver meaningful returns.
Those concerns were front and center at the Reuters NEXT Asia conference in Singapore, where executives overseeing large investment funds discussed the difficulties of building strong portfolios in an era defined by AI.
Rohit Sipahimalani, chief investment officer at Temasek, said the Singapore state investor wants to grow its AI holdings, but acknowledged the other side of that equation. “You want to ride that trend,” he said. “But the equally big issue is disruption because of AI to many other businesses… We’ve increased our exposure to businesses that are more around hard assets, which are likely to be less disrupted by AI.”
Temasek, which holds stakes in both Anthropic and OpenAI, announced Wednesday that it plans to significantly expand its AI investment — targeting an increase from 6% of its portfolio to as much as 15% over the next five years.
Sipahimalani stressed the importance of looking broadly at the investment landscape. “You’ve got to look at the entire value chain,” he said. “There are some areas where there’s froth, the other areas where there’s real cash flows. We try to play across the entire spectrum.”
Some investors are deliberately avoiding the flashier, higher-risk end of AI and instead focusing on the infrastructure that supports it. Stephanie Hui, who leads private and growth equity for the Asia-Pacific region at Goldman Sachs Asset Management, said her approach is more straightforward.
“I am not smart enough to tell you today which applications are going to be winning, it’s way too early,” Hui said during a panel discussion at the event. Her firm has invested in companies specializing in liquid cooling technology and data centers. “We are not going for the front end at this moment… We are going for the simple stuff that facilitates an end proxy for AI adoption,” she added.
Despite AI remaining the dominant theme in global markets, concern is growing about the sheer scale of investment and the risk of a bubble forming. Fred Hu, chairman of Primavera Capital Group in China, urged caution. “I’m a big believer in the AI revolution but as valuations keep going up, as more and more capital goes into AI… it begs the question, how much is enough,” he said.
Satoshi Ueyama of Bain Capital Japan acknowledged there are plenty of investment opportunities in the AI space, but warned that infrastructure spending only makes sense if there are enough end-users to justify it. His firm is focused on finding companies that are empowered by AI, particularly in services and consumer applications.
“AI is real but at the same time there’s no denying some parts of the markets are over-excited… Not all AI investment is going to be successful at this stage,” Ueyama said at the Singapore panel.
