- Wednesday, October 16, 2024
Data centers are poised to reap the benefits of the growing presence of artificial intelligence (AI), particularly in the real estate sector of the stock market. Laurel Durkay, head of global listed real assets at Morgan Stanley Investment Management, suggests that the high computing power required by AI may increase the value of some data centers. This emerging technology is expected to drive demand for these properties, leading to the development of new data centers and the expansion of existing ones.
A New Wave of Demand
Durkay emphasizes that we are only witnessing the initial stages of demand driven by artificial intelligence. She points out that the server requirements for AI workloads differ significantly from those of traditional applications. While traditional applications such as cloud computing mainly rely on central processing units (CPUs), AI workloads require graphics processing units (GPUs) which offer more power.
The Power of GPUs
Compared to CPUs, GPUs are more sophisticated and intense, making them well-suited for AI tasks. A GPU enables parallel processing and computing, allowing for the simultaneous execution of thousands of jobs. This increased computational power is vital for AI applications, making data centers equipped with GPUs more desirable.
Looking Ahead
As AI continues to advance and become more prevalent, the demand for data centers is expected to surge. The development and expansion of data centers will be crucial in meeting the growing computing needs of the digital economy. The rise of AI presents a unique opportunity for the real estate sector of the stock market, and data centers are poised to play a central role in this technological revolution.
In conclusion, the rise of artificial intelligence is set to have a significant impact on data centers. These facilities will become increasingly valuable as the demand for high-performance computing power grows. The unique requirements of AI workloads, particularly regarding GPUs, will shape the design and structure of future data centers. As the digital economy expands, data centers will play a pivotal role in supporting the workloads of AI and driving innovation in various industries.
The Growing Significance of Data Centers in the Real Estate Securities Market
Identifying the Future Hubs of Artificial Intelligence Data Centers
The AI Buzz: Investing in the Future
The Growing Impact of AI on the Stock Market
Stock-market investors have shown significant support for the AI theme, particularly at the megacap tech level, according to Jay Jacobs, BlackRock's U.S. head of thematics and active equity ETFs. This year, there has been a remarkable rally among giants in the hardware and software space, eliciting excitement about their growth prospects.
Nvidia Corp., a leading chip maker, has experienced a staggering 225% surge in stock value this year. Similarly, Microsoft Corp. has seen a significant jump of around 50% over the same period.
However, Jacobs believes that the market may have overlooked the second-order effects of AI. He believes that one must consider the downstream beneficiaries of increasing AI adoption, including the digital infrastructure that forms its backbone. Data centers serve as a prime example of this.
To gain exposure to AI opportunities, BlackRock recommends considering funds such as the iShares Semiconductor ETF, iShares Expanded Tech Sector ETF, iShares U.S. Tech Breakthrough Multisector ETF, and iShares Robotics and Artificial Intelligence Multisector ETF.
In fact, the iShares U.S. Tech Breakthrough Multisector ETF includes holdings in data center real estate investment trusts (REITs). Notably, Digital Realty Trust and Equinix are among the fund's holdings as of July 18, as per data from BlackRock's website.
Jacobs acknowledges that we are still in the early stages of this new AI world. The true potential of AI is only beginning to unfold.
All Rights Reserved © 2024
Post a comment