"In AI (artificial intelligence) investing, opportunities to selectively invest in bottleneck segments within the AI value chain may be more attractive than chasing already crowded mega-cap companies. A prime example is MLCCs (multilayer ceramic capacitors)."
In a recent interview with Money Today, Pedro Palandran, Head of Research at GlobalX, stated, "We are developing products linked to structural growth themes." In this context, GlobalX will list an MLCC and electronic components ETF (exchange-traded fund) on the 11th (local time). The product primarily invests in MLCC manufacturers from South Korea, Japan, Taiwan, and other countries, including Samsung Electro-Mechanics.
He acknowledged that "given the massive scale of recent AI-related investments, concerns are entirely valid," yet added, "I believe a virtuous cycle is forming where capital investment in AI boosts productivity and efficiency, which in turn drives improvements in corporate profit margins." Consequently, he drew a clear line: "It is difficult to view AI investments merely as excessive spending that does not translate into returns."
He further emphasized the need to expand investment scope, stating, "Even if we take a conservative stance on investing in the few large-scale investors, materials and core components will directly benefit." He assessed that "AI is linking sectors traditionally perceived as cyclical and sensitive to economic conditions—such as memory, storage, copper, rare earths, data centers, and power grids—to long-term structural growth trends." In other words, unlike the past when these areas moved cyclically with fluctuating stock prices, they are now entering a sustained upward trajectory.
Among these, he highlighted MLCCs as a recently focused area. He noted, "A single AI server requires approximately 30,000 MLCCs, while one server rack uses hundreds of thousands." He also mentioned, "There are projections that MLCC shipment volumes will grow at an annual rate of 30% through 2030." He added that for MLCCs specifically, supply is limited to a very small number of verified manufacturers, making investment opportunities particularly attractive.
Regarding recent stock market trends, he offered a positive outlook. Palandran stated, "The current market's upward momentum is driven by corporate earnings and profit margin improvements—fundamentals." He explained, "Recent volatility stems largely from geopolitical factors and macroeconomic influences, which may shock prices and investor sentiment but do not undermine fundamentals." He noted that the S&P 500's expected earnings yield stands at 16.6%, a record high.
Based on this market assessment, he advised considering stability through income-oriented investments alongside structural growth themes. He remarked, "Sectors and themes supported by improved earnings and fundamentals will likely stand out relatively." He suggested that rather than focusing solely on a few large corporations, investors should broaden their scope to include the entire value chain—covering metals, mining, power, infrastructure, defense technology, and cybersecurity.
He also anticipates continued growth in the ETF market. Palandran observed, "In the U.S. market, there are already more ETFs than individual stocks. Personally, I expect this number to double within two years." He predicted that future trends will enable retail investors to access assets and power sectors previously out of reach. For instance, he added, "Discussions are underway not only for private equity assets, alternative investments, and autocallable structured strategies but also for prediction market investment opportunities."
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