Market Views: How might diverging views on AI affect portfolio construction in Asia?

The artificial intelligence boom has become a defining investment theme in recent years, but sharp divisions are emerging among the industry's most influential voices over how quickly the technology should advance. While some AI pioneers warn of escalating risks and call for stronger safeguards, others argue that slowing development could undermine innovation and competitiveness.

For investors in Asia Pacific (Apac), the debate is more than a Silicon Valley disagreement. The region sits at the centre of the global AI supply chain, and any shift in the pace of development, regulation or spending could have significant implications for sector allocations and portfolio construction.

Against this backdrop, AsianInvestor asked market participants how diverging views on AI could influence investment positioning across Apac.

Alexander Treves, Asia head of investment specialists for emerging markets and Asia-Pacific equities

J.P. Morgan Asset Management

For Asia portfolios, we remain anchored in the structural AI trend, but the path from here is likely bumpier. Asia provides more than just advanced foundry—it is an exporter of high-value components across a tightly linked ecosystem.

As tech content becomes more intricate, there is a real advantage to having key parts of the supply chain physically co-located. With the memory upcycle intact, hyperscaler capex expectations still being revised upward, and some component shortages likely to linger, Asia’s role in AI becomes even more central as its impact extends further into the physical world.

Positioning-wise, we are constructive on AI infrastructure and AI application-related stocks that stand to benefit from long-term AI-driven growth.

We believe, however, that investors should look beyond technology, diversifying across the region to capture wider opportunities such as corporate governance improvements and the availability of yield. Sector-wise, we look to areas such as financials, consumption and industrials.

Zhikai Chen, head of Asia & global emerging market equities
BNP Paribas Asset Management

The concerns raised by AI developers reflect the anxiety over the very rapid advancements of AI models as the abilities develop beyond the developers' understanding and in some cases breaking through designed sandboxes. It is likely challenging to have a consensus to slow development for controls to catch up due to the intense competition.

While this has led to renewed concern in Asia about the durability of AI capex, this is not new. We remain selectively exposed to structural beneficiaries across computing, memory, networking and power infrastructure. Recent adjustments modestly increased financials, while the portfolio’s sector risk has remained below earlier peaks. With events in the Middle East unfolding, the implications for energy prices, inflation and the interest-rate path remain unclear.

We are therefore keeping powder dry, prioritising earnings visibility, valuation discipline and diversification while retaining the flexibility to lean in as visibility improves.

Ferdinand Cheuk, portfolio manager
Templeton Global Investments

The recent AI debate entails discussions around AI development slowdown and stronger regulations. This is a developing situation with uncertain outcomes, but we may see some impact on frontier model development and infrastructure capex.

The evolution of any industry invariably brings disruptions and opportunities. Even if some parts of the AI ecosystem slow down, other parts will continue to grow. For instance, we believe the inferencing needs of incumbent models should remain robust as agentic solutions become more popular. Cybersecurity is another area that bears watching. Asia remains a core part of the global AI value chain.

As the industry evolves, investors can focus on certain segments where supply shortages persist.

Daniel Xystus, CIO
Arc Orient Pacific Capital

My desk treats this split as data, not drama. Huang dismisses insider warnings as cybersecurity marketing, an Anthropic staffer flags real risk, and Musk claims AI could double global GDP — within hours. That's not consensus, just dispersion.

In Asia I'd rather focus on the hedge than the headline. The July sell-off that wiped over a trillion dollars from chip stocks, including SK Hynix and Samsung, showed how fast sentiment reverses on capital-spending doubts. One approach some desks are using: memory and foundry names barbelled against China's domestic chip and tooling supply chain, which gains either way the debate resolves.

Timing these drawdowns has been hard before. It may be again.