In this biweekly newsletter, Roula Khalaf, the head of the FT, selects her preferred articles.
Singapore’s Fund, one of the largest institutional investors globally, has recommended focusing on established technology giants rather than overvaluing startups in the rapidly evolving field of relational artificial intelligence.
According to Lim Chow Kiat, the CEO of the $700 billion sovereign wealth fund, tech giants such as Microsoft, Alphabet, and Meta are already capturing significant value in groundbreaking technologies through their existing customer base. He emphasized that customers are willing to pay for their services, making it a favorable position for investors. Conversely, he cautioned against the inflated prices of AI startups and the allure of hype, stressing the importance of prudent investment decisions.
This year has witnessed a surge in funding for conceptual AI companies, which specialize in generating lifelike imagery and human-like text rapidly. With Microsoft leading the charge in integrating AI into its products through collaborations with OpenAI, major tech players are banking on AI to drive their future revenues.
While GIC, the custodian of Singapore’s foreign reserves, does not disclose its investments by industry but rather by location, it has notably increased its portfolio allocation to the US, reflecting a strategic shift. In contrast to a decrease in investments in Asia (excluding Japan), the US now constitutes 38% of its portfolio, up from 37% in the previous year.
Despite not disclosing specific investments, GIC’s publicly traded portfolio includes significant holdings in silicon and technology hardware companies, such as Taiwan Semiconductor Manufacturing Company, DoorDash, Sony, and MediaTek. Additionally, its AI investments encompass a diverse range of companies, including SambaNova Systems, Pagaya Technologies, MioTech, and Quantexa.
Both GIC and Temasek, prominent Singaporean investors, recognize the transformative potential of AI for businesses. However, industry experts caution that many AI startups are overvalued and may not sustain success amidst the hype surrounding technologies like the ChatGPT chatbot.
As major tech firms forge closer ties with leading AI startups, venture capital firms and sovereign wealth funds are closely monitoring these developments. Partnerships between tech giants and AI startups provide access to crucial resources and expertise, with Microsoft and Alphabet making substantial investments in this space.
Furthermore, the significance of infrastructure in the AI ecosystem cannot be overstated. GIC anticipates a similar shift towards AI infrastructure akin to the cloud computing revolution, underscoring the importance of robust technological foundations for AI advancements.
While Singapore adopts a collaborative approach to AI rather than stringent regulation, concerns persist regarding the rapid development of generative AI. Lim emphasized the need for a long-term perspective, acknowledging the multifaceted challenges posed by AI advancements, including cybersecurity threats and misinformation.
