Strategic Allocation to Emerging Markets for AI Growth
The next significant opportunities for profiting from the artificial intelligence revolution might be situated far from traditional technology hubs, according to a prominent investment strategist. Tim Urbanowicz, chief investment strategist at Innovator from Goldman Sachs Asset Management, has articulated a compelling case for investors to broaden their horizons and consider emerging markets as a primary venue for capturing substantial gains within the AI sector, characterizing it as the “next big wave.”
Urbanowicz specifically highlighted Taiwan and South Korea as key territories poised to benefit from the ongoing AI infrastructure build-out. He noted that these nations represent significant components of the broad iShares MSCI Emerging Markets ETF, which has demonstrated robust performance, appreciating by 26% year-to-date as of the close on Thursday.
“These are major players in the AI trade and the AI space where valuations really haven’t gone up as much as they have in the U.S.,” Urbanowicz explained. “There’s still a lot of runway in our view to provide outsized gains with this AI trade.”
The market’s enthusiasm for AI-related equities in these regions is reflected in ETF performance. The iShares MSCI Taiwan ETF has surged by nearly 67% year-to-date, while the iShares MSCI South Korea ETF has seen an impressive increase of 109%, as of Thursday’s U.S. market close. Both of these ETFs offer exposure to companies central to the AI memory chip supply chain.
Further emphasizing his conviction, Urbanowicz pointed to the Goldman Sachs ActiveBeta Emerging Markets Equity ETF , an actively managed fund, as a strategic vehicle for investors seeking to capitalize on potential AI-driven growth within emerging markets.
Domestic AI Prospects Remain Favorable
Despite his optimistic outlook on international AI opportunities, Urbanowicz clarified that the domestic market also retains significant potential. “We think the U.S. is still positioned for success,” he asserted, indicating that U.S.-based equities continue to offer attractive prospects in the AI landscape.
Business Style Takeaway: This analysis suggests a strategic shift for global investors, advocating for a diversification of AI-related investments into emerging markets, particularly Taiwan and South Korea, due to potentially more attractive valuations and significant supply chain roles. The expert view underscores the need to balance domestic tech exposure with international opportunities to capture the full spectrum of AI-driven growth.
According to the portal: www.cnbc.com