Investment trusts are increasingly seeking AI investment opportunities beyond the well-known 'Magnificent Seven' mega-cap tech stocks. While these giants have significantly driven market gains, investment managers are identifying value in other areas. These include companies providing essential infrastructure for AI, such as data centres, cloud computing platforms, and semiconductor manufacturers.
Renewable energy is another key area, powering the energy-intensive AI workloads. UK-based renewable energy and infrastructure trusts are emerging as potentially strong investments, often undervalued and offering attractive dividend yields. Investment is also flowing into cybersecurity firms, as AI creates new opportunities for adversaries and the need for robust data protection grows. This diversification aims to tap into the broader AI ecosystem, mitigating risks associated with over-reliance on a few dominant tech companies and capitalising on the increasing demand for AI infrastructure and related services.
Fund managers suggest that the earnings growth of companies outside the 'Magnificent Seven' is expected to accelerate, potentially sustaining the equity market rally and broadening its base. This shift encourages investors to consider a wider range of companies that enable and support the AI revolution.
