Pimco Shifts Focus to Asian AI Supply Chain, Skips Big Tech

Pimco’s flagship 60/40 Balanced Income and Growth Fund, managed by Emmanuel Sharef, is turning its sights away from the crowded U.S. tech giants and instead targeting Asian companies that supply the AI infrastructure.

Sharef explained that the rapid rise in artificial‑intelligence spending has pushed debt levels higher for the biggest U.S. tech names, making their valuations less attractive. "You don’t need to own the most expensive stocks to capture a theme," he told Bloomberg News in Singapore.

The fund, which Bloomberg reports holds roughly US$19 billion (RM77 billion) in assets, has outperformed 97 % of its peers over the last three years.

"We’re underweight the majority of hyperscalers and the Mag‑Seven because of their high valuations," Sharef said. "The AI capital expenditure build‑out is massive, and that drives demand for semiconductors, cooling gear, optical equipment, power supplies, construction equipment and metals – all the building blocks of data centers."

Pimco remains overweight Asia, citing robust earnings growth and exposure to companies further down the AI supply chain. The fund is also bullish on biotech and life‑sciences, a sector it has been steadily adding to over the past 18 months.

"Some earnings upgrades come from increased M&A activity as large‑cap biotechs diversify their pipelines," Sharef noted. "AI could help cure more diseases by accelerating research.")

In China, the fund’s biggest sector allocation is financials, chosen for their lower volatility. It is also positive on materials, with the MSCI China Materials Index up about 7.1 % in the last month, buoyed by gold and copper rallies that lifted the sector to a leading position.

"Chinese resource extraction and materials companies are vital not only for data‑center expansion but also for rare‑earth supply," Sharef added.