Emanuel Datt
Artificial intelligence may be disrupting global equity markets and challenging traditional business models, but Emanuel Datt, Chief Investment Officer of Datt Capital, believes the long-term implications are overwhelmingly positive, particularly for Australian companies.
While the US market has struggled to regain momentum amid rapid AI-driven disruption, Datt argues the narrative is far from “doom and gloom.”
“It’s not all negative,” Datt says. “Ultimately, it’s about increasing productivity and efficiency, which is good for company owners and shareholders. We are already seeing very tangible productivity benefits playing out in real time, especially in the current reporting season.”
He highlights TechnologyOne’s (ASX: TNE) recent upgrade as evidence of real, measurable improvements in productivity and efficiency.
“These are tangible real-world outcomes. It’s not just conceptual anymore. If current performance levels can be maintained, parts of the technology sector now represent better value than they have for years. They’re looking more fairly valued than they have been for a very long time,” he says.
“While AI-driven efficiency gains may result in workforce reductions in some areas, we view this as a broader economic evolution rather than a crisis. With increase in productivity, products and services will ultimately get cheaper. That can reduce inflation and free people up to do something else. This is just a change in the economy and the nature of employment over time.”
“The real shift is that we’re seeing efficiency gains across multiple sectors. And that’s ultimately a positive story for shareholders and for Australia.”
The latest wave of AI product launches has intensified debate around the sustainability of established business models, particularly within software-as-a-service (SaaS).
“However, disruption does not equate to destruction. The current reporting season is showing that companies actively adopting AI are already demonstrating measurable improvements.
“Companies are trimming down their cost base and increasing efficiency across multiple metrics. Historically, operational improvements were often measured in basis points. Now some businesses are reporting gains in percentage points, this is a significant shift for large institutions.
“Even traditionally bureaucratic sectors such as banking are prime beneficiaries. Banks are notorious for being slow to adapt to change and carry excessive overhead and inefficiencies. For institutions of that nature, AI adoption is excellent.”
The productivity story extends well beyond office-based sectors. Australia’s major miners have been particularly proactive in deploying advanced systems.
“The big miners operate fixed assets, so it’s all about maximising utilisation time,” he says. “Over the past three years we’ve seen increasing adoption of more advanced technology systems to make operations more predictable and efficient.”
Given Australia’s recent productivity challenges, he sees widespread AI implementation as a structural positive for the broader economy and a win-win for the economy.
“The US market is viewed as a leader for good reason, but Australia is very different in virtually every aspect,” he says. “We’re well insulated from the tech boom in AI and well poised to benefit from its adoption.”
“The recent pullback in technology stocks is not evidence of structural weakness but a recalibration. We’ve seen the tech sector punished quite brutally since the start of the year from these fears. But they all seem to be reporting quite well.”
