The $1.4 billion fund, which is currently managed by JPMorgan Asset Management, is betting on shares of Asian companies whose activities are related to the supply of chips and which are trying to catch up with their American counterparts.
Oliver Cox, co-manager of JPM Asia Pacific Equity Fund, says that, with a high degree of probability, the number of orders related to artificial intelligence will increase shortly, for which investors will begin to set prices. These orders, as he suggests, will be intended for Asian companies. According to him, this scenario, if implemented, will lead to an increase in estimates in the second half of this year.
Oliver Cox argues that artificial intelligence can become a more significant factor in regional incomes. He also assumes that the hype with AI-related orders will continue until next year. He described this dynamic as catching up with trade, which is reflected in income. The Oliver Cox Fund is ahead of 86% of its peers this year.
Nvidia’s optimistic sales forecast, which was made public in May, caused increased interest, including primarily active and financial, in everything that is somehow related to artificial intelligence. This impulse has not lost its force yet.
Interest in artificial intelligence is natural, justified, and expedient. The technology of a new generation, which has the potential for a profound transformation of the space of human activity, cannot be ignored. New technological realities are creating new realities in other spheres, including economics and even politics, albeit on a limited scale, but the degree of AI impact on this area may increase many times in the future. Investing in artificial intelligence at present is not an attempt to conform to fashion trends, the existence of which is limited in time, or a kind of innovative experiment. This is the financing of the future and, in a certain sense, an obligatory mimicry about the new appearance of the world, to ignore which means to remain on the periphery of humanity’s forward movement.
Brokerage companies that were previously skeptical about commercial interaction with semiconductor suppliers have dramatically changed their position, and now characterize the shares of firms of the relevant profile as promising securities with great potential. They also pay special attention to companies that supply chips for developments in the field of artificial intelligence. In July, Morgan Stanley began to modernize chip manufacturers in Greater China, Japan, and South Korea.
The hype, which, according to experts, should become a favorable factor for Asian companies, so far gives more benefits to American firms. In Asian countries, due to falling incomes, the level of demand for electronics has decreased. Only now there is an increase in business related to artificial intelligence in this region. The share price of Taiwan Semiconductor Manufacturing fell by 3.8% amid a deterioration in the forecast of annual revenue.
The Bloomberg Asia Pacific Semiconductors Index has grown by 23% this year. This indicator is about two times less than the similar result of American companies. The Asian price-to-earnings ratio lags behind the Philadelphia Semiconductor index by almost five points. This gap is the largest in the last six years.
But one way or another, Asian companies have prospects and experts do not characterize their future as dark times. For example, forecasts say that Korean suppliers may be in an advantageous position due to a possible shortage of DRAM in 2024. This statement is based on the fact that artificial intelligence technologies stimulate the demand for high-bandwidth memory.
In June, the JPMorgan fund increased its stake in the Korean chip company Samsung Electronics and Unimicron Technology, a Taiwanese manufacturer of printed circuit boards. This year, the fund has demonstrated an increase of 7.1%.
Oliver Cox is also considering investing in chip packaging and testing firms in Japan and Taiwan. If the corresponding project is implemented, a separate technology-oriented fund will appear.
As we have reported earlier, JPMorgan On Track to Deliver $1 Billion in Value Through AI.