Investors need exposure to semiconductor companies and other "picks and shovels" of artificial intelligence as spending accelerates, even with the Iran war stoking geopolitical tensions, according to Goldman Sachs Asset Management's Brook Dane.
"Yes, the world is more uncertain today than it was four months ago. And risk premia have probably moved higher, structurally, because of that," Dane said Wednesday in a Bloomberg Television interview. "It doesn't change the direction and magnitude of what we are seeing."
Dane said demand for AI infrastructure remains intact. Compute capacity continues to be the most constrained resource in the market, underpinning a multiyear investment cycle led by major technology companies that remain committed to AI buildouts, said Dane, who is co-head of public tech investing at GSAM.
"Our baseline forecasts, when we do our bottoms-up work, continue to point to acceleration in capex spending and it being durable for much longer," Dane said.
"We are not late cycle. We are early cycle to mid-cycle," he added. "There is plenty of opportunity to continue to compound wealth and growth in the fundamental picks and shovels chip ecosystems of AI."
Semiconductor firms stand to benefit most directly, with Marvell Technology Inc. among the under-appreciated names in the industry, Dane said. He cited the company's ties to Amazon.com Inc. and other vendors, as well as its ability to expand product attachments and grow substantially.
Cybersecurity companies are another area of significant opportunity, as advances in AI drive the need for greater digital protections, Dane said.
(This story was produced with the assistance of Bloomberg Automation.)
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