For most of the past two years, the story investors told about artificial intelligence was a simple one: buy the chipmakers, the cloud giants and anything with a plausible claim to the technology, then hold on. That tidy narrative is now being pulled apart, and the fallout is reaching into corners of the Australian sharemarket that many people would not immediately connect to machine learning at all. According to a recent analysis from Kalkine Media, an “AI reset” is forcing a rethink of where value really lies, and both ASX-listed miners and homegrown technology shares are squarely in the frame.
What is actually being reset
The phrase “AI reset” is doing a lot of work, so it is worth unpacking. It does not mean the market has decided AI is a bust. Rather, it describes a maturing phase in which investors stop rewarding companies simply for mentioning the technology and start asking harder questions about who genuinely benefits and how quickly that shows up in earnings. The froth that lifted almost anything with an AI angle is giving way to a more discerning mood, and that shift changes the pecking order.
Two very different parts of the Australian market are catching the attention of analysts as a result. The first is the resources sector, which sits upstream of the entire AI build-out. Data centres, the physical homes of AI models, are enormously hungry for copper, aluminium, nickel and the electricity infrastructure that ties them together. The second is the local technology cohort, the software and services names that have ridden the enthusiasm and now have to prove their AI credentials translate into revenue rather than just slide decks.
The case for the miners
The argument for ASX miners is essentially a picks-and-shovels one. Whoever wins the race to build the smartest models, they will all need vast quantities of raw material and power to do it. Copper is the headline example, because every server rack, cooling system and transmission line depends on it, and the world’s copper supply is already stretched. Australian producers with copper exposure, alongside those supplying the critical minerals that feed batteries and grid storage, stand to gain from a construction boom that is only just getting under way.
This framing is attractive because it sidesteps the hardest question in AI investing, which is picking the eventual software winner. A miner does not need to guess whether one chatbot beats another. It simply needs the aggregate demand for computing to keep rising, and on that score the evidence is one-directional. The catch is that mining is cyclical, capital intensive and exposed to commodity prices that can turn on Chinese demand, so the thesis is more of a long-run tailwind than a guaranteed quarterly result.
The more sceptical view
Not everyone is convinced the reset flatters resources stocks. A more cautious reading holds that the link between AI enthusiasm and a shovel in the Pilbara is real but loose, and that commodity prices are driven by far bigger forces than data-centre construction, including global growth, interest rates and the pace of China’s recovery. On this view, treating a copper miner as an AI play risks bolting a fashionable story onto a company whose fortunes will be decided by entirely separate factors.
The scepticism cuts the other way for local technology shares too. If the reset is about separating genuine beneficiaries from passengers, plenty of smaller ASX tech names will struggle to make the cut. Investors who were happy to pay rich multiples for a growth story are now asking to see margins, customers and defensible products. That is a healthy discipline, but it also means some of the shares that ran hardest on the way up have the furthest to fall if their AI narrative proves thin. The recent enthusiasm for local small caps chasing an AI “next act” shows how quickly sentiment can build, and how exposed it can be when the mood turns.
What it means for Australia
For Australian investors and the broader economy, this reset lands in a particularly interesting spot. The local market is unusual among developed economies in being so heavily weighted towards resources and financials, with a comparatively thin roster of large technology companies. That has long been treated as a weakness in a tech-led world. The irony of the AI build-out is that it may hand Australia’s traditional strengths a second wind, because the country’s miners and energy producers sit right at the base of the supply chain that AI depends on.
At the same time, the reset is a reminder that Australia cannot coast on digging things up. The greater long-term prize lies in the businesses that use AI to lift productivity across mining, agriculture, health and financial services, and in the sovereign infrastructure being built to host it. Superannuation funds, which channel the retirement savings of millions of Australians, are among the biggest owners of both the miners and the tech names caught up in this repricing, so how the reset plays out is not an abstract question for the average worker. It flows through to the balance in their fund.
What is next
The near-term test will be earnings. Reporting season gives the market its first hard look at whether the companies wearing an AI badge can show it in their numbers, and whether the resources names can point to firming demand from the infrastructure boom rather than just hope. Expect a widening gap between the businesses that can and the ones that cannot, with valuations rewarding proof over promise.
The other thing to watch is capital. The enormous sums being poured into AI infrastructure globally have to be funded, and any sign that the spending is outrunning returns would ripple straight back to the commodity demand thesis that underpins the bullish case for miners. For now, the reset looks less like a retreat from AI and more like the market growing up about it. That is uncomfortable for anyone holding a stock priced on a story, but it is arguably good news for a market like Australia’s, where the picks and shovels have always been the point.
Sources: Kalkine Media.
