According to the Zhitong Finance APP, since this year, global companies have been laying out AI in an unprecedented frenzy, driving up the value of REITs assets of data centers around the world and attracting investors who are extremely bullish on the development of AI technology to bet on the rising stock price of Australia's industrial real estate giant Goodman Group. This is because the company's prime location and ample financial resources will continue to drive its entry into the highly profitable field of AI data centers. In the US stock market, Digital Realty (DLR.US), a data center real estate investment trust company, has also seen strong growth, with a surge of as much as 60% since 2023, and recently announced that it will form a joint venture with the world's largest alternative asset management company Blackstone (BX.US) and invest $7 billion to develop new large-scale data centers.

Australia's industrial real estate giant Goodman Group's stock price has risen 40% this year in Sydney, making it the best-performing REIT symbol in Bloomberg World REIT Index. The company owns a range of core properties in the most popular locations globally, including Sydney, Hong Kong, Los Angeles, and Frankfurt. More importantly, Goodman Group has been working hard to convert some of its large-scale industrial warehouses into large data storage spaces.

"The closer you are to your customers, the better," said Jun Bei Liu, portfolio manager at Sydney's Tribeca Investment Partners. She added that Goodman Group is one of the top five companies in the fund she manages and "owns properties near the central business district, which are very valuable."

The rise in Goodman Group's stock price reflects investors around the world looking for ways to grasp this wave of AI fever, even in markets dominated by the world's largest mining companies and major banks, such as Australia. "I would say this is the best AI play in Australia," Liu said, adding, "I think the company will definitely go higher."

Last month, Goodman Group, an important component of the Bloomberg World REIT Index, raised its annual profit growth expectations for the year ending June 30 from 11% to 13%, citing soaring demand for "ever-expanding digital economic infrastructure". The company said its strong balance sheet positions it well in the face of continued volatility in the global real estate market.

"Goodman's move from traditional industrial to AI data centers is not just a gimmick," wrote Bloomberg Intelligence analyst Matt Ingram in a report. "Goodman can maintain strong profit growth by repurposing existing assets and developing new projects to meet the global demand for data center construction."

Valuation is a concern for some investors, with Goodman Group expecting a price-earnings ratio as high as 30x, above its five-year average of 24x and higher than Singaporean peer Keppel DC REIT's 20x valuation. Citigroup Inc. analyst Howard Penny said the valuation may be justified given its strong growth potential, as the "global data electrical bank" it is developing is only a small part of its development projects.

Penny wrote, "As more potential 'electrical banks' turn to ongoing development work, this should continue to drive Goodman Group's growth potential relative to its real estate peers." Penny rates the company's REIT assets as "buy" and adds that Goodman Group is likely to exceed its recently raised profit growth expectation and may provide strong new year expectations.

In the US stock market, Digital Realty's focus on data center real estate has already taken off.

The world's largest alternative asset management company, Blackstone Group, and data center real estate investment trust company Digital Realty recently announced the formation of a joint venture and plans to invest $7 billion to develop 10 data centers in four key locations around the world: Frankfurt, Paris, and northern Virginia in the US.

The world's leading cloud service providers and AI technology leaders, such as AWS under Amazon, Google Cloud Platform and Microsoft Azure Cloud Platform, are accelerating investment and construction of large-scale data centers in North America to meet the skyrocketing cloud AI training/inference computational demand of their cloud computing clients in recent years, which is the core logic behind the surge of Digital Realty, one of the largest data center REITs in North America, by nearly 60% since 2023.

Digital Realty is one of the largest data center real estate investment trusts (REITs) in North America, with more than 290 large data centers. The company serves over 4,000 commercial customers, including globally recognized enterprises such as social media giant Meta Platforms (the parent company of Facebook and Instagram), IBM, JPMorgan, and Oracle. Digital Realty occupies an important position in the global, especially in the North American data center market and is in a long-term growth trend of global enterprise digital transformation and data center expansion. Its business model and strong customer base indicate the company has long-term strong growth potential.

The frenzy of artificial intelligence investment is gradually entering the second stage! The rise of data center REITs is unstoppable.

As more and more companies around the world turn to cloud computing service platforms and invest heavily in developing generative AI tools like ChatGPT, the demand for large-scale data centers from global technology giants like Google, Microsoft, and Amazon remains elastic even as the global economy, particularly the real estate economy, faces high uncertainty. The adoption scale of new technologies such as cloud computing, the Internet of Things (IoT), and generative AI applications like ChatGPT in multiple industries and industry verticals is increasing in size, which also makes technology companies more and more demanding of the underlying infrastructure-data centers that support these technologies. Data centers are a critical asset that drives new technologies including generative AI.

By 2023, ChatGPT will be popular worldwide, Sora's video large-scale model will be launched in 2024, and 'shovel sellers' Nvidia will have unparalleled performance for several quarters in the AI field, which may mean that human society will gradually enter the AI era from 2024. Large AI data centers are core large-scale infrastructure projects of the AI era and are crucial for the full scale rise of generative artificial intelligence like ChatGPT.

Amazon AWS recently announced a major investment plan to invest up to €7.8 billion (approximately $8.44 billion) in Germany by 2040 to specifically build European AI cloud computing infrastructure, which is the core infrastructure of the company's AI services; Amazon also announced plans to invest $9 billion to expand its cloud computing infrastructure in Singapore within the next four years. This investment will double AWS' investment in Singapore and is expected to meet the growing demand of Asian-Pacific customers for cloud computing services and accelerate the development of AI computing power.

At the “Advancing AI” conference, AMD, the most formidable competitor of Nvidia, expected the global AI chip market size from 2027 to soar from $150 billion to $400 billion, while the AI market size in 2023 is only about $30 billion. The prominent investment institution I/O Fund estimated that the total potential market size of the global AI data center market in 2027 will reach $400 billion, and it is expected to reach $1 trillion by 2030. All of these imply that with the continuous surge in demand for AI servers chips like Nvidia H100/H200/GB200 and AMD MIX300 series, more and more large-scale AI data centers need to be built globally to support these servers equipped with high-performance AI chips.

Goldman Sachs, the Wall Street giant, believes that the 'stock engine fuel' of the global stock market, the artificial intelligence investment craze, is far from exhausted. In its latest forecast report recently released, the firm stated that the global stock market is still in the first stage of investing craze led by artificial intelligence. However, the trend has gradually expanded to the second, third, and fourth stages, boosting the value of more and more industries worldwide.

"If Nvidia represents the first stage of the AI stock trading craze--the stage most directly benefited from the AI server chip--the second stage will see other global companies besides Nvidia help establish AI-related infrastructure," wrote Goldman Sachs."The third stage is expected to be companies that incorporate AI into their products to increase revenue, mainly consisting of software and IT service firms, and the fourth stage concerns the comprehensive improvement of production efficiency related to AI, which may be achieved in many global enterprises."

In the second stage of the AI investment craze, focus is on companies that participate in AI infrastructure development other than Nvidia, including chip manufacturers such as Taiwan Semiconductor, semiconductor equipment manufacturers, and chip companies focusing on terminal-side AI applications. The second stage of the AI investment craze mentioned by Goldman Sachs includes semiconductor equipment manufacturers such as ASML Holding and Applied Materials, as well as chip manufacturers, cloud service providers, data center REITs, data center hardware, and chip equipment companies that include Nvidia. The AI investment craze will extend to the infrastructure of the real world as artificial intelligence will require huge AI data centers to run, which will drive everything from data center REITs to utilities.