UniSuper doubts AI investment boom lasting

Investors are beginning to question whether the surge in artificial‑intelligence spending can be sustained, according to a recent discussion on UniSuper’s Super Informed Radio podcast.

AI‑related funding faces new scrutiny

David Colosimo, head of fixed interest at the pension fund, said the sharp decline in semiconductor stocks in July signaled more than routine profit‑taking. He argued that market participants are reassessing the economics that have driven the AI boom.

Colosimo highlighted the launch of Chinese AI lab Moonshot’s Kimi K3 model, noting that the new system was introduced “at a fraction of the cost of US models.” The development, he said, has focused attention on whether AI will stay a premium technology or become quickly commoditised.

He drew a parallel with other high‑tech sectors, pointing out that China now dominates solar panels, batteries and electric vehicles. “The big question is, can they sustain all of their investment? Because it’s that investment that feeds the revenue for all these chip makers,” he said.

The past month has been volatile for AI‑linked equities, with semiconductor firms giving back much of the gains recorded earlier in the year.

Colosimo described the reversal as a familiar pattern: strong price momentum attracts leveraged investment, which then retreats as sentiment shifts.

Higher global bond yields have also weighed on the sector, reviving inflation concerns.

Despite the pullback, the earnings performance of major U.S. technology companies remains robust, with the sector delivering growth of roughly 50 percent.

Investors are becoming more selective about growth funding. For example, Google’s share price reacted less favorably after raising its capital‑expenditure forecast, while Microsoft and Amazon saw stronger market responses.

Outside the tech sphere, renewed conflict in the Middle East lifted oil prices by more than 30 percent in July, boosting energy firms and pushing global bond yields higher.

Recent inflation and labour‑market data suggest the Reserve Bank of Australia is likely to keep interest rates unchanged at its August 11 meeting.

Colosimo noted that Australian inflation is still running too strong for the RBA’s liking, but economic reports on the labour market and inflation have both come in a bit weaker than what the RBA was forecasting in May.

He also expects Australia’s reporting season to be softer than that of the United States, with earnings growth projected around 10 percent versus close to 30 percent in the U.S.

Overall, the discussion reflects a broader market caution as participants weigh the long‑term viability of AI‑related capital projects against the backdrop of rising financing costs and shifting competitive trends.