ASX Tech August winners: Data centers win big as AI continues to be a major theme in tech – Stockhead

• The technology sector had a down month in August
• Has the AI ​​topic reached a bubble state?
• We take a look at the ASX tech winners of the month

Sentiment towards growth stocks got a reality check in August as traders weighed the outlook for much slower growth in China.

At the end of the month, both Nasdaq And ASX Information Technology (XIJ) This index is lower than 2%.

Despite the widespread sell-off, Nvidia stock rose to an all-time high thanks to a revenue forecast of $16 billion for the next quarter (from $13.5 billion currently).

Nvidia is one of the main beneficiaries of the wave of interest in “innovative” AI, with major companies willing to bet their future on AI. Many believe they will have to do so with Nvidia chips if they don’t want to fall behind the competition.

Google (Alphabet Inc) also hit a new 52-week high in August, reinforcing the stock’s remarkable recovery this year.

Google soared after announcing a series of new AI products and partnerships in the last week of August aimed at equipping its enterprise customers with the latest AI technology.

AI adoption will ‘happen in waves’

Leading megacap technology names are certainly in a prime position to assume a market leadership role in the emerging field of AI.

However, according to Betashares’ Cameron Gleeson, there is still a long way to go before they can make the most of their position.

“Once their models are developed and deployed, they are adopted over time and drive revenue growth,” Gleeson said.

Gleeson believes that demand for hardware like Nvidia’s chips will grow much faster than more downstream technology applications.

“As a result, investors can expect adoption to come in waves, rather than all at once,” he added.

Australian companies are also making an effort to highlight their AI coverage during the local earnings season, Gleeson said, but the reality is the story remains US-centric, at least for now. .

Gleeson says that while the AI ​​theme represents a good long-term investment, investors should have a properly diversified portfolio of stocks that can deliver incremental growth as well as provide protection against short-term price declines.

“Investors should not put all their eggs in one basket and should seek to build a strong core with diversified exposure to Australian and international shares, bonds and other assets – even could even include our Nasdaq 100 ETF if they want higher AI exposure,” Gleeson said.

Australia lags behind in AI adoption

Josh Kannourakis, co-head of technology at Barrenjoey, told AFR that local investors would be hard-pressed to find pure innovation AI stocks on the ASX.

Kannourakis said that in addition to companies such as data center providers NextDC (ASX:NXT)many local companies that brag about AI may not be tech companies at all but are just leveraging AI to improve their operations.

Gleeson agrees and says we’re not there yet when it comes to what AI can create.

“Despite claims to the contrary, Australia remains largely an AI-free zone,” he said.

“The real leaders in artificial intelligence are more likely to be found on Nasdaq in the US or Nekkei in Japan.

“The reality is that Australian companies in this sector are more likely to be disrupted by global leaders than to join them,” Gleeson said.

Here are the top ASX tech winners for August 2023

On the ASX, data center stocks have surged over the past month as demand for their services surges. This is mainly because customers across different sectors are enhancing their AI capabilities.

Scroll or swipe to display the panel. Click on the title to sort.

4DS Memory (ASX:4DS)

The 4DS continues to grow thanks to its recent breakthrough where it successfully incorporated ReRAM memory cells into its megabit imec array.

The company has also confirmed that its 4DS interface switching ReRAM technology is portable from fab to fab and has demonstrated a fully functional megabit array.

Read now: 4DS is an Australian semiconductor innovator. And it’s having the best day in memory

Savings (ASX:FGL)

The retail intelligence company that specializes in analyzing grocery data has grown since announcing its new CEO.

The company announced in August that Kenny Woo, currently a non-executive director of Frugl, would take over as CEO with immediate effect.

Woo is an experienced technology startup entrepreneur with a proven track record.

For 10 years, he was founder and CEO of Easy Plastic and Facilipack Industries, manufacturers of disposable food packaging specializing in extrusion and thermoforming processes.

Bravura Solutions (ASX:BVS)

The asset management software company grew despite reporting lower revenue and higher operating expenses in FY23.

The company told the market that this trading performance had fueled the need and urgency for change, leading to a new CEO, chairman and board joining Bravura in the second half of the year. .

The market was also impressed after the independent non-executive chairman, Matthew Quinn, recently bought $127k worth of BVS shares.

EML Payments (ASX:EML)

EML grew last month after revealing that it beat its FY23 guidance, hitting revenue of $254.2 million (up 4% from the top-end estimate provided to the market). , resulting in underlying EBITDA of $37.1 million.

The end result was not spectacular, but EML said it still had a statutory net loss after tax of $284.8 million, due to $258.9 million after tax relief from the acquisitions of PFS Group and Sentenial.

Hearing (ASX:AD8)

The audio visual solutions company achieved record revenue and profit growth during the year.

Revenue on PCP increased 40% to $46.7 million.

Bottom line EBITDA was $11 million, up 156.4% from 2022.

The company achieved a pre-tax net profit milestone of $1.4 million, compared to a loss of $4.4 million in fiscal 2022.

Energy One (ASX:EOL)

The energy sector-focused technology company jumped after announcing it had received a non-binding proposal from a global investment firm, STG.

STG wants to buy EOL for $5.85/share in cash. The stock is currently trading at $5.36.

Dicker data (ASX:DDR)

The data center company reported first-half revenue of $1.107 billion, up 5.3% from PCP.

Bottom line PAT of $54.1 million was up 7.8% on pcp.

Dicker said the highly diverse nature of the company’s technology and supplier portfolio has helped it offset declines in other segments.

But CEO David Dicker admits that the current market is facing many challenges.

“We performed well in the first half of 2023. Total revenue increased more than 9%, despite a challenging market where traditionally strong segments, such as devices, have declined.”

Next DC (ASX:NXT)

Data center stock reported that revenue hit the guideline, up 25% to $362.4 million.

Basic EBITDA increased $24.6 million, up 15% on PCP.

Looking ahead to FY24, NXT said total revenue is expected to be between $400 million and $415 million (compared to FY23 of $362.4 million).