Stories
AI investment story intact, but stock selection is key: Geosphere’s Arvind Sanger
- •Arvind Sanger of Geosphere Capital Management believes the recent correction in AI stocks does not mark the end of the investment cycle, but urges investors to be more selective.
- •New risks for AI stocks include memory pricing pressures from China, political uncertainty surrounding US data centers and power infrastructure, and heavy funding requirements.
- •Investors are shifting focus toward corporate balance sheets, particularly concerning infrastructure spenders like Oracle and CoreWeave.
- •Beyond AI, Sanger sees attractive opportunities in specialized IT services, select financial companies, hospitality, and domestic demand businesses in India.
- •Geopolitical risks such as potential crude oil price spikes remain a concern for the Indian market, though IPO-driven liquidity absorption continues to create niche mid-cap opportunities.
Key Questions Answered
Arvind Sanger notes that new risks for AI stocks include memory pricing pressures stemming from developments in China, political uncertainty surrounding US data centre and power infrastructure, and growing scrutiny over whether infrastructure companies can sustain their heavy investments. Concerns regarding the balance sheets of firms like Oracle and CoreWeave have heightened caution among investors following a strong market rally.
Despite potential risks like rising crude oil prices following the US midterm elections, Geosphere Capital favors export-oriented manufacturers, specialized financial services, non-banking financial companies (NBFCs), select banks, hospitality and travel businesses, and niche mid-cap opportunities.
Arvind Sanger believes that broad-based IT services may face disruption in mass-market business over the next two to three years, whereas specialised players positioned to help enterprises implement custom large language models will have a stronger runway for success.
