GQG’s Jain Cuts AI Exposure on Data Center Woes, Backs Utilities

Rajiv Jain of GQG Partners is reducing exposure to AI-linked investments due to concerns about decreasing data-center demand, particularly in Asia where utility companies report hyper-scalers are lowering demand forecasts after aggressive AI growth; Jain remains optimistic about utilities.

Analysis

Rajiv Jain, manager of the $23 billion GQG Partners Emerging Markets Equity Fund, is strategically reducing exposure to artificial intelligence-linked investments due to emerging concerns about waning data-center demand. This adjustment, as stated at the Morgan Stanley Australia Summit, is informed by reports from Asian utility companies indicating that hyper-scalers are paring back their data-center demand forecasts following a period of aggressive AI-driven growth in the region. This development suggests a potential near-term deceleration in a key infrastructure segment supporting AI, leading to a moderately negative sentiment and a cautious tone regarding this specific aspect of the AI investment thesis. In contrast, Jain expressed continued bullishness on utilities, potentially signaling a defensive rotation or a view of undervaluation in that sector. The per-ticker sentiment for GQG Partners is slightly negative (-0.2), reflecting this cautious shift away from a high-growth theme.

Key Decisions for Investors

• Investors should review their allocations to AI-related investments, particularly those with significant exposure to data center infrastructure, in light of potential demand moderation signaled by hyper-scalers in Asia.
• Consider evaluating opportunities within the utilities sector, which GQG Partners views favorably, as a potential defensive measure or alternative investment focus amidst concerns about AI infrastructure demand.
• Monitor communications from hyper-scalers and Asian utility providers for further confirmation or contradiction of the reported slowdown in data-center demand to better gauge the sustainability of AI infrastructure growth.