Soaring AI spending is set to give ASX earnings a sugar hit — but how long will the high last?
Massive investments into AI infrastructure are expected to provide a welcome tailwind for local companies this earnings season. But the long-term picture may be less rosy.
The end of the financial year is officially past us and ASX-listed companies, big and small, are already gearing up for the start of earnings season in a month’s time.
But despite waves of gloom and uncertainty repeatedly washing over a market upturned by the Iran conflict and rising interest rates, the colossal wave of money pouring into AI infrastructure is set to provide local companies with a welcome earnings boost.
The question is how long that sugar hit will last.
“For the near term, I think the earnings will probably be quite fine for these companies that are in the data centre trend,” Pitt Street Research equity analyst Charlie Youlden tells Capital Brief.
“But long term, I think there’s a lot of volatility when the cycle starts to slow down and trade off, and these companies stop investing as much. That’s when the real trouble begins.”
