Not at the Peak of the AI Cycle, Says Eastspring Investments
Source: The Edge Singapore
Eastspring Investments' chief economist Ray Farris argues the AI investment cycle has not peaked despite recent market volatility, advising investors not to write off the theme as the sector shifts into later-cycle dynamics with slower but still meaningful growth.
The AI investment cycle still has room to run, according to Eastspring Investments. Chief Economist Ray Farris told The Edge Singapore that while growth rates are naturally decelerating as the investment base expands, the sector has not reached its peak — and investors should resist the temptation to write off the AI theme prematurely.
Farris points to the memory chip selloff on June 8-9 as evidence of the market's jitters, when Samsung Electronics dropped roughly 10% and SK Hynix fell about 8% before rebounding sharply. The episode reflects uncertainty around the AI narrative, but Farris views it as a correction within a maturing cycle rather than a signal of collapse. "Slowing growth does not mean that there is no growth," he said, describing the current phase as "later-cycle dynamics" where massive investment bases naturally depress percentage growth rates.
The broader context is telling: leading frontier AI companies like OpenAI and Anthropic are still targeting trillion-dollar IPO valuations, and global AI infrastructure spending continues to climb. Farris' assessment aligns with a growing consensus that the AI buildout is transitioning from its hypergrowth phase into a more sustainable expansion — one that rewards execution over narrative.
For portfolio strategy, Farris advises against exiting AI positions. Instead, the focus should shift to companies with strong execution, scale, and cash flow generation — a more selective approach than the broad-based AI rally of 2023-2025.
Why it matters for Singapore: Eastspring Investments is one of Asia's largest asset managers, headquartered in Singapore with US$240 billion in assets under management. The firm's view carries weight in Singapore's financial community, where AI-related equities have become a significant component of wealth management portfolios. As Singapore positions itself as a regional hub for AI investment and fund management, institutional perspectives like this shape how capital flows into the sector from the city-state.