Global fund manager Blackrock describes artificial intelligence (AI) as a rising mega-force set to transform economies worldwide.
In its Global 2025 Outlook, Blackrock says the AI revolution will have three phases: buildout, adoption, and transformation.
We're currently in the buildout phase. Blackrock estimates that AI infrastructure investment could top US$700 billion by 2030, which is the equivalent of 2% of US GDP.
Tony Kim, Head of Blackrock's Global Technology Team in Fundamental Equities, said:
The first phase is the race to build the infrastructure AI needs.
It's happening now, with tech giants driving record levels of capital expenditure (capex) into data centers, AI models and the power systems that support them.
We see big cloud providers and chip producers benefiting, along with companies in the utilities, energy, industrials, materials and real estate sectors that provide key inputs for this buildout.
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Which ASX shares are good AI investments?
In this buildout phase, Morgans Head of Research, Alexander Mees, says ASX investors should focus on companies involved in digital infrastructure, such as data centres and data networks.
NextDc Ltd (ASX: NXT) and Goodman Group (ASX: GMG) are the largest data centre operators in the ASX.
Both companies have enjoyed significant share price growth in the year to date (YTD). NextDc shares closed at $16.25 on Friday, up 19% in the YTD. Goodman Group shares closed at $36.57, up 46% YTD.
Morgans prefers NextDc shares and has a buy rating with a 12-month share price target of $20.50.
At Nextdc's recent AGM, CEO Craig Scroggie said AI was a "defining opportunity" for the company.
He commented:
AI is set to drive one of the most profound transformations in the history of technology, ushering in the Fourth Industrial Revolution. For NextDc, this moment is a defining opportunity.
We're not only positioned to meet the rising demand for AI but to set the benchmark for innovation, resilience, and sustainable data centre infrastructure.
Meantime, Morgan Stanley has an overweight rating on Goodman shares due to the company's strong recent performance and pipeline of data centres.
The broker has a 12-month share price target of $42.40 on the ASX property stock.
In terms of other ASX AI shares, Morgans also likes data network provider Megaport Ltd (ASX: MP1).
It has a buy rating on Megaport with a 12-month share price target of $12.50.
Mees explains that Megaport is more specialised than traditional data network providers and capital-light.
Mees said:
Megaport is a global cloud connection network and the leading Network as a Service provider.
It operates the largest data centre connection business in the world, connecting to 850 data centres through a fully automated, on-demand telco network.
We think it is uniquely placed to help business move data globally and benefit from the growth of data related to both cloud computing and AI.
Goldman Sachs is also buy-rated on Megaport with a 12-month share price target of $10.40.
In a recent note, the broker said:
We believe MP1 will benefit from strong structural tailwinds from the adoption of public cloud including multi-cloud usage and the transition towards NaaS technologies.
While acknowledging mixed near-term execution around the partner channel and the new MVE product, we are Buy rated on the name as we remain confident MP1 has a clear product advantage vs. peers and a decade-long runway for robust growth.
Despite the soft operational trends in recent periods, we expect still robust top-line growth, with the increased focus on profitable growth supporting an attractive earnings profile over FY25-26.
The Megaport share price finished the session on Friday at $7.75, down 15% YTD.
