AustralianSuper digs down on AI ’picks and shovels’ to ride out global AI upheaval

SYDNEY — Australia's biggest pension fund, AustralianSuper, has announced its strategy to navigate the turmoil in the global AI market. The A$430 billion ($301.7 billion) fund has decided to stick to the "picks and shovels" approach in the sector, focusing on chipmakers and hyperscaler data centres. Mark Hargraves, head of international equities and private equity at AustralianSuper, believes these companies will weather the current storm engulfing the AI sector.

The fund's largest AI-linked exposure is in Nvidia, with about A$3.05 billion worth of stock in its balanced portfolio. It also holds significant stakes in Microsoft, Alphabet, SK Hynix, SpaceX, Meta, Broadcom, and Micron. Hargraves explained that large language models require compute power, and hyperscalers are providing this through data centres, which are driven by chips. He stated that their strategy involves being focused on "picks and shovels" but adapting as the landscape evolves and new opportunities emerge.

Despite recent volatility, many fund managers remain bullish on the long-term prospects of the AI sector. AI and AI-related stocks now make up about 40% of the global equities market, according to Hargraves. He added that the speed of the industry's evolution is faster than any previous cycle that he has witnessed in over 30 years of working in equities.