Riding the AI Boom: Top Seven Singapore Stocks to Invest

June 14, 2024

The evolution of Artificial Intelligence (AI) is reshaping industries globally, prompting a surge in demand for advanced data infrastructure and sustainable energy solutions. Singapore, known for its strategic initiatives and forward-thinking policies, stands at the forefront of this transformation.

Here is a look at the top seven data centres and renewable energy investments in Singapore that are capitalizing on the burgeoning AI revolution.

1. Keppel DC REIT (SGX: AJBU)

As Asia’s first pure-play data centre REIT, Keppel DC REIT is ideally positioned to capitalize on the growing demand for digital data storage and cloud services. The focus solely on data centres ensures it benefits directly from the digital boom. With properties across Asia Pacific and Europe, Keppel DC REIT offers geographic diversification, reducing regional market risks and maximizing exposure to global tech growth.

The REIT has also shown strong financial performance with consistent growth in income and high occupancy rates, ensuring stable and predictable returns for investors. Its long-term leases provide revenue visibility, bolstering financial security. Aside from that, Keppel DC REIT also invests in energy-efficient technologies to reduce operational costs and aligns with increasing investor interest in sustainable and responsible investments, enhancing its appeal in a market leaning towards environmental consciousness.

2. CapitaLand Ascendas REIT (SGX: A17U)

CapitaLand Ascendas REIT (CLAR) stands out with its extensive collection of high-tech industrial spaces, including state-of-the-art data centres. As Singapore’s largest industrial REIT, CLAR boasts a substantial portfolio that includes cutting-edge data centres alongside its high-tech buildings and business parks. This diverse asset base is strategically located across developed markets, including Singapore, Europe, and Australia, providing significant exposure to the global digital economy.

A critical aspect of CLAR’s appeal lies in its proactive approach to sustainability. The REIT integrates green practices into its operations, enhancing energy efficiency across its properties. This commitment not only aligns with global environmental goals but also reduces operational costs, thereby increasing profitability. Moreover, CLAR’s robust financial performance, marked by steady growth in distributable income and a strong track record of managing occupancy rates, makes it an attractive investment. The REIT’s focus on high-demand sectors like data centres ensures it is well-positioned to capitalize on the digital transformation driving today’s economies.

3. Digital Core REIT (SGX: DCRU)

Backed by Digital Realty, one of the largest data centre providers globally, Digital Core REIT offers investors exposure to some of the most strategically placed and technologically advanced data centres worldwide. This makes it an attractive option for those looking to invest in digital infrastructure critical to AI technologies.

The REIT’s focus on properties with strong sustainability profiles also appeals to the growing number of investors prioritizing environmental considerations. Digital Core REIT’s assets are designed to meet stringent efficiency and sustainability standards, which not only helps in reducing operational costs but also aligns with global efforts towards reducing carbon footprints.

4. Mapletree Industrial Trust (SGX: ME8U)

Mapletree Industrial Trust (MIT) stands out as a compelling investment due to its diverse portfolio, which significantly includes a strong focus on data centres. These facilities are integral to supporting the expansive needs of global digital transformation, particularly in AI and cloud computing. MIT’s strategic expansion into data centres, especially in key markets across North America and Asia, aligns it with the surging demand for digital infrastructure.

MIT’s commitment to integrating green technologies into its operations further enhances its investment appeal. This focus not only meets growing environmental regulations but also improves operational efficiencies, leading to reduced costs and increased profitability.

5. Sembcorp Industries Ltd (SGX: U96)

Sembcorp Industries is a leading player in the renewable energy sector, making it an attractive investment for those looking to capitalize on the global shift towards sustainable energy solutions. As data centers, driven by the growth of AI and digital technologies, increasingly require vast amounts of power, Sembcorp’s ability to provide clean energy is crucial for supporting sustainable digital infrastructure.

The company’s extensive portfolio of renewable energy projects, including solar, wind, and hydroelectric power across multiple countries, positions it well to meet the growing demand for green energy. Sembcorp’s commitment to innovation in energy efficiency and sustainability aligns with global environmental goals and regulatory frameworks, enhancing its market position and potential for long-term growth.

6. Singtel (SGX: Z74)

Singtel, a major telecommunications leader in Asia, offers a unique investment opportunity as it expands its services beyond traditional telecom into the burgeoning realms of digital infrastructure and data centre management. This strategic diversification allows Singtel to leverage its extensive network capabilities to meet the increasing demand for comprehensive digital solutions, which include cloud services and advanced data management necessary for supporting AI technologies.

The company’s ongoing investment in expanding its data centre capabilities positions it well within the rapidly growing digital economy. According to news report, Singtel is believed to be the latest international company to be setting up a data centre in Johor, Malaysia. Singtel’s commitment to innovation and its strong regional presence enhance its competitive edge and offer the potential for significant growth.

7. Keppel Ltd (SGX: BN4)

Keppel stands as a diversified conglomerate with significant operations spanning from marine and property to infrastructure and investments, making it a robust investment choice. Notably, Keppel plays a pivotal role in the energy sector, including renewable energy solutions that power essential infrastructure like data centers, aligning with global sustainability trends.

The company’s strategic focus on green initiatives, particularly in offering sustainable urbanization solutions, positions Keppel as a leader in eco-friendly development. This approach not only meets increasing environmental regulations but also drives innovation in clean energy and smart infrastructure development.

Investing in Keppel provides exposure to a broad spectrum of industries, each benefiting from the company’s commitment to sustainability and innovation. This diversity reduces risk and offers multiple avenues for growth, making Keppel an attractive option for investors looking at long-term stability and involvement in transformative global trends.

Conclusion: Take advantage of the global AI growth

Investing in data centres and renewable energy stocks in Singapore opens up numerous avenues to capitalize on the global AI growth. These sectors not only offer promising returns due to the escalating demand driven by AI but also align with global sustainability trends, making them crucial for investors who are looking to future-proof their portfolios. As AI continues to integrate into every aspect of modern life, the strategic importance of these investments will only grow, placing Singaporean investors at the leading edge of technology and sustainability.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of the company mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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