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T. Rowe Price highlights AI “sleepers” beyond chip and cloud makers
The firm frames today’s spending as a shorter data center hardware cycle within a longer, decades-long AI shift, and says smaller firms can still capture share as AI costs fall.
Most of the attention in the AI trade, T. Rowe Price portfolio managers say, has gone to chipmakers and cloud providers. In conversations on the firm’s “The Angle” podcast, they argued that the next “sleepers” may be companies in sectors investors are looking past, including healthcare, robotics, financials, and industrials. The managers said the current buildout is best described as a “data center cycle” rather than an “AI cycle,” and compared it to the late 1990s internet buildout. They characterized it as an early stage shift, with a five-to-seven-year hardware cycle, followed by longer follow-on booms across areas such as e-commerce, mobile phones, and cloud computing. T. Rowe Price also pointed to why smaller companies could benefit, saying AI adoption does not reward size the way earlier technology waves did. One example cited is that an annual AI budget of $20 million would place a company in the top 20% of corporate spenders, a level the managers said many smaller firms can already meet, with expectations that the bar may drop as AI costs decline. For investors seeking exposure through funds, the outlet highlighted T. Rowe Price’s actively managed ETFs, including the T. Rowe Price Technology ETF and the T. Rowe Price Small-Mid Cap ETF (TMSL). The podcast notes that TMSL leans heavily toward industrials, healthcare, and financials, and that the managers screen potential AI “sleepers” using traits such as technical depth, network effects, and physical assets like sensors or logistics networks.