Infrastructure and cybersecurity stocks will be some of the best investment plays come 2025. That’s the sentiment echoed by Blackrock’s (BLK) head of thematic and active exchange-traded funds, Jay Jacobs. According to Jacobs, the artificial intelligence adoption cycle is still in its early days. Given that AI companies need to build their data centers and keep their data safe, exciting investment opportunities should crop up.
AI Investment Opportunities
As artificial intelligence companies seek to safeguard their data in data centers, most of them are likely to turn to cybersecurity firms. Likewise, they should turn to infrastructure companies to develop data centers that can handle the vast troves of data that come into being amid the AI frenzy. Likewise, Jacobs expects cybersecurity software and infrastructure companies to see rapid revenue growth as companies turn to them for their service and products.
The fact that iShares Future AI & Tech ETF (ARTY) and iShares AI Innovation and Tech Active ETF (BAI) are up by about 13% for the year underscores the new way of investing to take advantage of the AI rush. For a long time, the focus has been on individual companies like Nvidia (NVDA) and other semiconductor companies developing chips to power AI models. Likewise, investors have concentrated on tech giants as they seem to have the upper hand amid the AI rush.
Blackrock’s iShares Future AI & Tech ETF (ARTY) is one exchange-traded fund that seeks to capture the entire value chain of artificial intelligence. The ETFs consist of holdings from disruptors to developers’ data and service providers. It stands out as one of the top AI ETFs as its holdings are broader, with tech giants accounting for 90% of its holdings.
Microsoft AI Chip Export Boost
Meanwhile, Microsoft’s (MSFT) strategic partnership with Emirati AI firm G42 has received a significant boost. The US government has approved the export of advanced artificial intelligence chips to a facility run by the two companies in the UAE. The approval comes amid heightened restrictions over potential national security risks.
However, the second part of the agreement, which transfers sensitive model weights and AI chips with export restrictions, has drawn criticism. G42’s past ties to Chinese companies involved in military and surveillance projects, in particular, alarmed critics. The ties cast doubt on the partnership’s wider ramifications as Microsoft aims to position the United Arab Emirates as a global leader in artificial intelligence.
The chips, which are said to be from a top manufacturer like Nvidia, will be essential to Microsoft and G42’s projects, such as the creation of sophisticated AI models. In collaboration with AI chipmaker Cerebras, G42 is already using US data centers to train its bilingual Arabic-English large language model, Jais.
Amid the approval, the Microsoft-G42 deal’s approval forbids people covered by the US arms embargo, which includes Chin, from having access to the chips or the facility. Microsoft must take additional precautions to stop employees of the Chinese government or companies with Chinese headquarters from using the chips to train AI models. Participation is also prohibited for those on the Treasury Department’s sanctions list.
