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Emerging Markets Lead Global AI and Data Center Surge with Nuclear Boost

Author

Joshua Collado
May 07, 2025

Emerging Markets Lead Global AI and Data Center Surge with Nuclear Boost

Hello and welcome to Macro Notes bi-weekly analysis, where we bring a current macroeconomic trend to light, explain why it’s important, and cover how to invest against it. Today, we’re zooming in on artificial intelligence (AI).

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Global AI Expansion Drives Data Center Boom

Even as we enter an increasingly protectionist trade era, one sector is proving to be a surprise international growth play: artificial intelligence and data center infrastructure. 

After hundreds of billions of dollars spent on AI across developed nations, emerging markets are catching up. The United Nations recently released a report showing that 70% of officials within emerging markets expect AI to compensate for what the UN calls an “unprecedented slowdown” in productivity growth. 

But it isn’t just the UN betting on rapid AI expansion internationally. Google, for example, is expanding its footprint in Malaysia with a $236 million AI construction project that includes a hyperscale data center south of Kuala Lumpur. 

This deal is Google’s second significant investment in the region, after its 2024 $2 billion investment in Malaysia’s AI infrastructure.

So What?

Expect a two-pronged AI emphasis within emerging markets:   

  1. Increased demand for AI services internationally to increase regional productivity and support GDP growth.

  2. Increased interest in international AI infrastructure expansion from domestic companies (like Google) to support AI development within those markets and help diversify their domestic hardware footprint.

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Powering the Projects

However, power generation remains the wrench in worldwide AI planning, especially in emerging markets where reliable electricity is already dicey. 

To counter that, the enthusiasm for nuclear energy is returning, and emerging markets like Argentina see an opportunity to become the next big thing in an AI-powered nuclear renewal revolution.

Argentinian President Javier Milei released plans to make the South American nation a hub for nuclear energy development. Specifically, Milei wants to become the global center for small modular reactor (SMR) production. 

SMRs are, as the name implies, tiny nuclear reactors assembled on-site to fuel specific facilities or projects rather than vast regions. Because of their size, transportability, and comparative safety (not to mention ease-of-use), many expect SMRs to be a massive growth industry supporting AI expansion in general, and emerging market developments specifically.   

In an interview, Milei’s chief advisor, Demian Reidel, said that global AI expansion demands a power supply with “these three characteristics: clean, scalable, and stable. The only thing that really hits the three of them is nuclear.”

The Main Takeaway

❌ Avoid hardware-heavy AI plays due to tariff uncertainty, especially if you’re already overweight the well-known names (i.e., Nvidia) through direct or indexed investing.

✅ Target service-sector AI companies active within international circles. Service providers tend to go untouched during trade wars, since they’re harder to tax - U.S. service sectors grew by nearly 1% in April even as manufacturing and industrials dropped.

✅ If you do want to make a hardware play, look to region-specific data center manufacturing or upstream power suppliers.

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How to Play the AI Craze

American Tower (NYSE: AMT) 

This REIT owns and operates cell towers internationally, but is increasingly getting into the AI game via its Access Edge Data Centers applications. These mini data centers tap into existing cell infrastructure and serve as a leg-up for emerging markets to begin AI expansion without the massive costs associated with a full data center infrastructure build-out. 

Zscaler (NASDAQ: ZA) 

Expanded cloud-based digital storage within data centers demands increased cybersecurity measures, particularly in emerging markets with limited existing solutions. Zscaler is a go-to name in cloud security services with existing clients across the Americas, EMEA, and Asia-Pacific regions. This existing market footprint and brand recognition will serve Zscaler well as new data center providers look to reassure their clients that their data is safe. 

Nano Nuclear Energy (NASDAQ: NNE) 

SMRs are a relatively new concept and aren’t yet widely available (or even out of production and initial testing phases, frankly). However, Nano Nuclear is becoming one of the top stocks with 10X+ potential as they develop their ZEUS (solid core battery reactor) and ODIN (salt coolant reactor) platforms. Nano Nuclear specifically targets niche markets like small international data centers, making it a first mover in an emergent field.

If you’d prefer a bit more diversification, these ETFs may be just the ticket:

VanEck Uranium and Nuclear Energy ETF (NYSEARCA: NLR)

Expense ratio: 0.56%, or $56 on a $10,000 investment. 

NLR blends next-gen nuclear opportunities like Nano Nuclear and Oklo with industry stalwarts, such as Constellation Energy and PG&E, to offer small-cap upside potential diversified with large-cap stability.

iShares Future AI & Tech ETF (NYSEARCA: ARTY)

Expense ratio: 0.47%, or $47 on a $10,000 investment. 

ARTY is an all-weather global AI bet, though it slants more heavily toward full-scale data center infrastructure developers like Arista and Vertiv, helping it capitalize on emerging market expansion trends. 

KraneShares Emerging Markets Consumer Technology ETF (NYSEARCA: KEMQ)

Expense ratio: 0.80%, or $80 on a $10,000 investment. 

KEMQ provides a wide swatch of emerging market consumer tech stocks, with individual companies capped at 3% and country weights at 40%. The riskiest on the list, KEMQ’s 1.30 beta points to significant volatility, but it’s one of the best emerging market tech pure-play picks.

That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.

Best Regards,
—Noah Zelvis
Macro Notes

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