Yahoo Finance 4 Country ETFs to Benefit From AI Boom
The global shift toward digitization and increased cloud adoption, accelerated by the pandemic, has spurred demand for data centers in emerging markets.This surge is driven by needs such as video streaming, data storage, and the growing demand for AI services.
While the ongoing AI boom has taken the global tech biggies in its grip and boosted the tech sector’s market performance manifold, there are some country ETFs in the AI ecosystem that stand to benefit from the AI revolution and data center growth.
Emerging markets deserve special mention in this regard as the space offers advantages in terms of cost-effective energy and ample land for large-scale data center infrastructure, which are crucial for accommodating AI services requiring extensive space, energy and cooling resources.
Let’s delve a little deeper.
Malayasia – iShares MSCI Malaysia ETF (EWM)
Malaysia is becoming a key player in Southeast Asia's data center industry, attracting significant investments from tech giants like Google, NVIDIA and Microsoft. Johor Bahru, near Singapore, has particularly seen a surge, with projections suggesting it will soon surpass Singapore as Southeast Asia's largest data center market, per a CNBC article.
According to DC Byte's 2024 Global Data Centre Index, Johor Bahru leads as the fastest-growing market in Southeast Asia, boasting 1.6 gigawatts of total data center capacity, including projects in various stages of development, as quoted on CNBC.
Taiwan – iShares MSCI Taiwan ETF (EWT)
Taiwan's economy and markets are heavily influenced by its advanced technology sector, thanks to its significant contributions from the semiconductor industry. Taiwan is positioning itself as a connectivity hub in Asia, driven by its chip industry and strong ICT sector.
As the leading chip manufacturer, Taiwan Semiconductor Manufacturing Company (“TSMC”) is crucial for the production of high-performance components necessary for AI applications. Moreover, the most famous name in the AI story – NVIDIA – is heavily involved in Taiwan's AI ecosystem, which is collaborating with major Taiwanese firms like Foxconn.
Japan – iShares MSCI Japan ETF (EWJ)
Japan and Singapore currently dominate live data center capacity in Asia. Japan's data center market is rapidly expanding due to increasing demand from digitization, 5G deployment and AI advancements. The country's data center capacity is projected to reach 1.69 thousand megawatts (MW) in 2024, with expectations of further growth to 2.15 thousand MW by 2029.
Companies like Amazon’s AWS, Microsoft, and Google are enhancing their infrastructure to meet the growing computational needs. Last year, AWS announced a $15 billion investment to expand its data centers in Tokyo and Osaka, while Microsoft committed $2.9 billion to boost AI and cloud infrastructure, including the addition of advanced GPUs and new research labs.
Singapore – iShares MSCI Singapore ETF (EWS)
Singapore deserves a special mention. It was historically a data center hub, but has moderated its growth due to resource constraints. This has redirected investments to Malayasia, benefiting from its proximity and favorable economic conditions.
Still, the Infocomm Media Development Authority (IMDA) has launched a Green Data Centre Roadmap to support sustainable development and expansion. This roadmap aims to add at least 300 megawatts of capacity, focusing on energy efficiency and the use of green energy sources. Players like AWS are making substantial investments. AWS has committed $12 billion to enhance its cloud infrastructure in Singapore.
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iShares MSCI Japan ETF (EWJ): ETF Research Reports
iShares MSCI Taiwan ETF (EWT): ETF Research Reports
iShares MSCI Singapore ETF (EWS): ETF Research Reports
iShares MSCI Malaysia ETF (EWM): ETF Research Reports
