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AI-related capital expenditure and data center development are spreading beyond developed markets, Franklin Templeton chief executive Jenny Johnson said at a DBS Asia Future Forward Conference, while warning investors to scrutinize vendor financing and guarantees underpinning the boom.
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Johnson said most AI investment has originated in the US due to the technology's origin, deep capital markets and institutional framework. But capital formation is now emerging in Saudi Arabia, Brazil, Mexico, Indonesia, Malaysia and India.
"It is occurring, just not at the pace we see in the US," she said, adding that emerging Asia will likely catch up quickly.
On "circularity"—where one company's revenue funds investments in another—Johnson said investors must track all sources of debt, including vendor financing and off-balance-sheet structures where another party borrows but the original company guarantees it.
"You have to pay attention to all the sources of debt that a company has," she said.
On the "pick and shovel" side of AI, she said shorter-dated debt offers an investment-grade premium and potentially higher returns, but cautioned against going too far out on the curve given rapid technological change.
The panel also touched on demand for natural resources and data center infrastructure as customers look to invest in new markets.
