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Microsoft Japan To Invest $2.9B In Data Centres

Microsoft Japan plans to invest $2.9 billion in artificial intelligence (AI) data centres to address demographic challenges and advance digitalization.

TakeAway Points:

  • Miki Tsusaka, president of Microsoft Japan, highlights Japan’s rapid AI adoption, driven by demographic challenges and a $2.9 billion investment in AI data centres.
  • Microsoft Japan continues to place a high premium on cybersecurity, enabling the responsible and secure application of AI technology in partnership with the government.
  • With a 26% growth rate in 2024, T. Rowe Price’s Global Technology Fund (PRGTX) beats the market thanks to important assets like Nvidia (18% of the portfolio), which saw a 166% increase.

The Adoption of AI in Japan

Japan has rapidly embraced new artificial intelligence (AI) tools with significant potential to further accelerate its economy and tech sector, according to Microsoft Japan President Miki Tsusaka. The country’s digitalization efforts received a substantial boost during the pandemic as businesses adapted to remote work. Tsusaka noted that Japan, previously a laggard in digital adoption, has now caught up. 

“The Japanese have caught up. And I think it will continue to accelerate at this point because the technology enables things that we haven’t been able to do,” she said.

Japan faces demographic challenges, including an ageing population and a shrinking workforce, which AI could help mitigate. 

“We don’t have enough people, our population is ageing, and yet generative AI has the power to accelerate growth,” Tsusaka added. 

Microsoft Japan is focusing on skilling up more women in the workforce, part of a broader $2.9 billion investment over the next two years to expand its AI data centres in the country. This announcement in April positively impacted utility and industrial shares, driven by expectations of rising power demand.

AI and cybersecurity

Cybersecurity is a critical priority for Microsoft Japan, as highlighted by Tsusaka. “You can’t use AI without security. It’s security, security, security. And then you get to use AI,” she emphasized. 

Microsoft collaborates closely with the Japanese government at both national and local levels, as well as with businesses, to ensure that technology is deployed responsibly and safely. Tsusaka views AI as an inevitable and revolutionary part of technology, comparing its impact to that of the internet and mobile phones.

“We were all amazed when the internet came. Mobile phones now are part of our bodies. But generative AI, I think, is a technology revolution that surpasses all of those,” she stated.

Rowe Price’s Investments in AI

Rowe Price’s Global Technology Fund (PRGTX) has outperformed the market for a second consecutive year, thanks to early investments in AI. The fund, managed by Dominic Rizzo, has jumped more than 26% in 2024 after a 56% surge in 2023.

Rizzo attributes this success to a four-step investment framework focusing on “linchpin technologies” critical to a company’s success, such as AI for semiconductor companies like Nvidia. Nvidia, a key holding, accounts for nearly 18% of the portfolio and has seen its shares rise 166% in 2024. “Nvidia is clearly the linchpin of AI,” Rizzo said, highlighting the company’s comprehensive AI capabilities.

Other significant holdings include Taiwan Semiconductor Manufacturing and Advanced Micro Devices, making up 5% and 4% of the portfolio, respectively. The fund also holds positions in Apple and Microsoft, which account for 12% and about 10% of the portfolio. 

Rizzo praised Microsoft’s enterprise software leadership and Apple’s consumer dominance, noting that both stocks offer stability and reasonable valuations with compound earnings growth potential.

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