In the short time it has been trading, the SpaceX share price has already provided investors with a bouncy ride. Having floated at 161p, it hit 202p before returning to 160p* – all in the space of three weeks. Investors remain divided on the charms of the inter-planetary innovator, as they do about the other IPOs scheduled for this year. For investors who like the idea, but prefer a gentler ride, there are other options.
Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Chelsea does not offer advice and so if you are unsure of anything please contact an expert adviser.
Asia’s AI opportunity
The most obvious alternative to the US technology giants is their Asian equivalents. Asia is home to many mission-critical technology hardware companies, making the semiconductors, memory and other widgets that power AI. While they have been well and truly discovered by global investors, they still trade at a discount to similar US companies, such as Nvidia.
They have also shown significant volatility, particularly the Korean market where domestic investor participation and leverage have created lot of movement. However, the companies themselves are solid.
Martin Lau, manager of the FSSA Asia Focus fund, points to TSMC, the Taiwanese semiconductor giant: “As the leader in its field, TSMC has been able to raise prices steadily over the years – an indication of its strong competitive moat. In recent years, TSMC has been a major beneficiary of AI advancements. Revenue and profits are expected to continue to grow due to the extremely robust demand from AI, while sectors like robotics are expected to push semiconductor needs even higher.”
Equally, while the fund has meaningful exposure to AI infrastructure – technology is 42% of the fund, with TSMC at 10.1%, Samsung Electronics at 9.6% and MediaTek at 7.8% – it is balanced with exposure to other areas, such as banking and insurance groups across the region**. This mitigates risk overall.
China also offers a different route into the AI trade. The Chinese government has sought to forge its own AI path, having been locked out of US AI supply chains. The launch of large language model DeepSeek in January 2025 showed that it could rival the US on AI development.
China specialist fund managers say they are finding real opportunities in the AI ecosystem within the country. Shao Ping Guan, manager of the Allianz China A-Shares fund says the performance of the ChiNext Index, often referred to as China’s Nasdaq, shows the success of many of these companies: “The ChiNext index recently broke through to new all-time highs, spurred by tech and AI-related names. Since the low point of China equity markets in February 2024, ChiNext has returned around 145%, versus 55% for the MSCI China index.”
He says China does not have a TSMC or Samsung, so these companies do not often hit the headlines. “Nonetheless, they are playing a key role in the build-out of China-centric AI infrastructure including chips, data centres, models and applications. Indeed, in a number of cases they are also key suppliers to US hyperscalers.”
The next wave of AI winners
One notable feature of the AI revolution to date is that the only real beneficiaries have been larger companies. While this is often the pattern for technology revolutions, the opportunity tends to broaden out over time. George Cooke, manager of the WS Montanaro Global Select fund says that shift is now underway, and smaller companies are poised to be a significant beneficiary.
“We have seen this pattern before. During the TMT boom of the late 1990s, the logic was identical: own the internet platforms, own the telecoms infrastructure builders, own the hardware giants. Between 1995 and 2000, the MSCI World Large Cap Growth Index outperformed everything else. Smaller Companies, in both the US and Europe, were largely left behind.”
He says a change occurred as the internet moved from novelty into everyday infrastructure. Companies of all sizes began to adopt e-commerce, enterprise software, digital payments and networked supply chains and the value pool broadened dramatically. “The winners of that second wave were not the original dot-com giants; many of those had already blown up. The biggest winners were the businesses that had learned to use technology as a competitive weapon: the nimble, the specialised, the less well-known.” From 2000 to 2005, the MSCI World Small Cap index outpaced the MSCI World index by more than 70%***.
He adds: “AI is no longer just a software story. As adoption accelerates, it is becoming an increasingly physical one. Data centres require land, power, cooling, cabling, water, insurance, financing, controls and ongoing maintenance.” He sees opportunities in firms providing the physical building blocks of AI deployment – data-centre construction, power transmission, networking, but also in adoption: companies using AI to reduce costs, improve workflows, increase pricing power, launch new services or deepen customer relationships***.
Smaller companies may be in a better position to adopt AI. They are less encumbered by legacy systems and have fewer processes to unpick than larger peers. They’ve also been significantly out of favour, so pricing looks more attractive.
If investors have the appetite for AI, there are plenty of ways to get involved without taking a risk on volatile and high profile IPOs. The AI revolution will have many winners and many of them are still flying under the radar.
