The artificial intelligence revolution is firmly here, according to a deep dive into Australia’s AI opportunity by UBS strategist Richard Schellbach and economist George Tharenou. Their report reveals a staggering $21.6 billion in data centres under construction, expected to double within 18 months, potentially peaking at 2 per cent of GDP. This marks the most significant investment cycle since the mining boom. UBS is a global financial services company offering wealth management and investment banking services; its strategists often publish market analyses.
Economically, this data centre boom will drive demand for materials and labour, creating inflationary pressures that could prompt further RBA rate hikes. While a federal report found no broad labour market upheaval from AI, UBS analysts project potential workforce reductions of 10-15 per cent across ASX companies within three to five years. Equity markets already reflect AI’s influence, with related activity dominating capital market volumes and disrupting intangible asset sectors.
UBS’s analysis identified Australia’s AI winners and losers. Despite subjective scoring, findings highlight tech-heavy sectors like gaming, healthcare, and IT with the highest AI opportunity. Mining also ranked highly, with giants such as BHP and Rio Tinto seeing substantial gains from AI deployment. Conversely, real estate and transport recorded the lowest scores. Generally, larger companies with deep pockets and strong management, including Woolworths, Coles, and Commonwealth Bank, were identified as having the best AI opportunity.
Some blue-chip stocks, like Commonwealth Bank and Macquarie Group, already show AI opportunity priced in. However, UBS analysts identified several companies trading at discounts despite strong AI potential, including AGL, Computershare, and Qantas. This exercise underscores the challenge for Australian investors in directly backing pure AI innovators. Nevertheless, Schellbach suggests Australia’s tech-lite exchange might become a safe haven when the current AI fervour eventually subsides.
