The emergence of generative artificial intelligence (AI) platforms like ChatGPT and the recent surge in Nvidia Corporation (NASDAQ: NVDA) shares on Wall Street has reignited interest in AI this year.
And while the Australian share market doesn't have a great deal of AI shares for investors to choose from, it does have a few ASX tech shares that stand to benefit from the megatrend.
Two such ASX tech shares to consider are listed below. Here's what you need to know about them:
Macquarie Technology Group Ltd (ASX: MAQ)
The first ASX tech share that could benefit from the AI boom is Macquarie Technology. It is a leading data centre, cloud, cyber security, and telecom company for mid to large business and government customers.
Goldman Sachs believes Macquarie Technology is well-placed to benefit from AI. It recently explained:
We believe the DC [data centre] industry will benefit from a 'third wave of demand', with generative AI requiring 5-10x more compute vs. traditional search. However, we note the (1) size of the opportunity; and (2) mix of beneficiaries (hyperscale/co-lo), are ongoing debates.
In the near term, we believe AUS co-location facilities could benefit by hosting early local AI deployments by enterprises, with large foundational models such as ChatGPT appearing to run in the US/Europe facilities currently. However, in the medium term, we believe the need for (1) lower-latency applications and (2) for ecosystem connectivity, evident in existing AI players (such as harrison.ai) focusing on on-ramps, will drive compute into co-location facilities such as NXT/MAQ/SPK (albeit with adapted building designs for new builds/retrofits).
Goldman has a conviction buy rating and $75.30 price target on the company's shares.
Volpara Health Technologies Ltd (ASX: VHT)
Another ASX tech share that could benefit from AI megatrend is health technology company Volpara.
Volpara makes software to save families from cancer. Its AI-powered image analysis enables radiologists to quantify breast tissue with precision and helps technologists produce mammograms with optimal image quality, positioning, compression, and dose. At the last count, the company's software was helping providers conduct more than three million cancer risk assessments each year.
As AI becomes even more smarter, it is possible that Volpara's products will become even better. It may also open up new use cases. In addition, healthcare companies may be more accepting of AI-based products now that they can see what the technology can do. This may make the sales process a lot easier for Volpara in the future.
One broker that is very positive on Volpara's outlook is Bell Potter. It currently has a buy rating and $1.20 price target on its shares.
