Forget the magnificent seven – data centres are key to the AI revolution

3 minute read

Matthew Norris

Director, Real Estate Securities

Generative artificial intelligence (AI) took the world by storm last year when ChatGPT was ‘unleashed’ on the public. And with their share prices rising rapidly, it’s perhaps not surprising that investors focused on the ‘magnificent’ seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla), which have subsequently been making the headlines.

The potential uses for AI are frankly mind-blowing and the sector is still very much in its infancy.

At the recent International Monetary Fund economic summit in Switzerland, head of the organisation Kristalina Georgieva, commented, “We are on the brink of a technological revolution that could jump start productivity, boost global growth and raise incomes around the world.”

But to my mind it’s still very much a guessing game in terms of who will win the AI race and, as it is likely to pervade pretty much every area of the global economy and every inch of our lives, it’s difficult to know what to invest in.

What we do know is that AI – in whatever form it takes or whatever use it fulfils – needs data. And a lot of it. Consider this: Intel estimates that autonomous vehicles alone may generate 4 terabytes of data each day. That’s the equivalent of an average person using a smartphone for 60 years. And that’s just one application that uses AI.

So investors would do well to look at the infrastructure that is needed to enable all the mass adoption of AI – the next generation digital infrastructure: the data centres, the communications towers, the fibre networks and the energy storage that will make it all possible. The picks-and-shovels of the AI goldrush, if you will.

Data centres, in particular, are experiencing a once-in-a-generation growth and we’re seeing a lot of activity in the sector. Last month, for example, Digital Realty a holding in the VT Gravis Digital Infrastructure Income fund and the largest global provider of cloud- and carrier-neutral data centres, colocation and interconnection solutions, created a joint venture with private equity firm Blackstone to develop four hyperscale data centre campuses across three metro areas on two continents, with a total estimated development cost of c. $7 billion.

I see more of the same in the future.

Find out more about the VT Gravis Digital Infrastructure Fund here.

Important Information

This article has been prepared by Gravis Advisory Limited (“the Investment Adviser”) and is for information purposes only. It is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Any recipients outside the UK should inform themselves of and observe any applicable legal or regulatory requirements in their jurisdiction.

This article should not be considered as a recommendation, invitation or inducement that any investor should subscribe for, dispose of or purchase any securities or enter into any other transaction with the VT Gravis Digital Infrastructure Income Fund, or any other Fund affiliated with the Investment Adviser. The merits and suitability of any investment action in relation to securities should be considered carefully and involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of such securities.

Although high standards have been used in the preparation of the information, analysis, views and projections presented, no responsibility or liability whatsoever can be accepted by the Investment Adviser for any errors, omissions, misstatements, loss or damage resultant from any use of, reliance on, or reference to the contents. The views and opinions contained herein may not necessarily represent views expressed or reflected in other Gravis communications, strategies or funds and are subject to change.

VT Gravis Digital Infrastructure Income Fund, a sub-fund of VT Gravis Real Assets ICVC, is a UCITS Scheme Open Ended Investment Company (“OEIC”).

Past performance is no guarantee of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

Gravis Advisory Limited (Registered Number: 09910124) is an Appointed Representative of Valu-Trac Investment Management Ltd, which is authorised and regulated by the Financial Conduct Authority.

Gravis Advisory Limited’s principal place of business is: 24 Savile Row, London, W1S 2ES.


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