The anti-AI playbook: 8 ASX stocks to own while the market crowds into tech

Most investors are still trying to figure out how to get more exposure to AI.

Chris Scarpato is doing the opposite.

As a portfolio manager at Alvia Asset Partners - a $700 million multi-family office managing wealth for business owners, industrial founders, and multi-generational families - Scarpato doesn’t have the luxury of chasing momentum. His job is different: preserve capital, grow it steadily, and make sure it survives the next cycle.

That perspective forces a different way of investing.

Because while markets are pouring billions into AI infrastructure - chips, data centres, and platforms - Scarpato is asking a far more uncomfortable question:

What if the returns don’t justify the spend?

We’ve seen this movie before. BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO) were punished in the 2010s as they ramped up capex just as commodity prices rolled over - and investors headed for the exits when it became clear the returns wouldn’t stack up on new projects.

Instead of following the crowd, Scarpato is building portfolios around inflation resilience, pricing power, and what he calls “second-order” AI opportunities - the parts of the market that benefit from AI without wearing the hype.

A messy macro: Inflation pressures meet an overheated AI trade

Scarpato describes today’s backdrop as “an interesting cocktail” - and it’s not hard to see why.

Geopolitical tensions, persistent inflation, and policy confusion are colliding all at once. Even before the latest flare-up in the Middle East, many economies were already grappling with structurally high inflation, driven by labour shortages and construction bottlenecks. Now, energy shocks and supply chain disruptions are piling on.

“We’re still early innings on seeing price and cost pressures come through the economy,” he says.

That creates a difficult dynamic for policymakers, who are effectively working against each other. Central banks are trying to rein in inflation, while governments continue to spend - a tug of war between monetary and fiscal policy that risks keeping inflation elevated for longer.

But it’s the AI trade that really has his attention.

The scale and speed of capital flowing into AI infrastructure - particularly data centres - is “extraordinary" and that’s exactly the problem.

History shows that when capital floods into a single theme, returns tend to compress - much like past mining booms, where resource shortages quickly turned into oversupply.

The concern isn’t whether AI is transformative - it almost certainly is — but whether the economics of the current investment cycle will stack up.

“The biggest question will be, in three to five years’ time, what the return on investment actually looked like,” he says.

His scepticism is most acute around the enablers, particularly data centre operators like NextDC (ASX: NXT), which recently announced a $1.5 billion capital raising and are being forced into an aggressive capex cycle with uncertain payoffs.

Meanwhile, some parts of the ecosystem are beginning to show signs of excess, including what he describes as “circular” revenue dynamics - particularly where companies like Nvidia (NASDAQ: NVDA) invest in partners and effectively pull demand through their own ecosystems.

As a result, we're in a market where a handful of mega-cap names are driving the majority of index returns while masking a growing set of opportunities elsewhere.

The anti-AI playbook: Five ways to invest when the hype is crowded

Rather than chase AI directly, Scarpato is building portfolios around distinct buckets designed to weather inflation, volatility and valuation risks - while steering clear of crowded trades where investors risk getting their fingers burnt.

1. Energy winners: When higher oil prices fuel margins

If inflation is being driven by energy, owning the producers is the most straightforward hedge.

That’s why Scarpato holds names like Woodside Energy (ASX: WDS), which is benefiting from elevated oil and gas prices.

“These companies are making hay when the sun shines,” he says.

As energy prices rise, margins expand, providing a natural buffer against broader market volatility.

2. Contracted cashflows: Pricing power locked in

The second bucket is more nuanced: companies that can pass rising costs directly onto customers.

A key example is Aurizon Holdings (ASX: AZJ), which operates critical rail infrastructure across Queensland’s coal network.

Through long-term “take-or-pay” contracts, Aurizon can pass cost increases through to customers, protecting margins even in an inflationary environment.

“That provides a degree of margin and cash flow resilience,” Scarpato explains.

On top of that, favourable commodity prices are supporting volumes, creating a rare combination of pricing power and growth.

3. Dominant platforms and software enablers: Mispriced in the AI narrative

The third bucket focuses on companies that dominate their niche, particularly those mispriced due to AI disruption fears. One example is News Corporation (ASX: NWS).

And no, Scarpato isn’t buying it because people are turning to the Toowoomba Chronicle. The real value lies in its subsidiary data platforms like Dow Jones.

Dow Jones, which News Corp bought in 2007, has quietly evolved into a high-value analytics business - providing energy pricing, risk intelligence, and proprietary datasets to corporates.

“The value of those services - and their ability to pass through price - has really come to the fore,” he says.

But it’s not just data platforms. Scarpato is also finding opportunities in high-quality international software businesses that have been sold off, yet sit alongside the AI buildout rather than competing with it.

Names like ServiceNow (NYSE: NOW) and Constellation Software (TSX: CSU) fit this mould - dominant, mission-critical platforms with pricing power and lower disruption risk.

4. Healthcare defensives: Essential, overlooked, and resilient

Another domestic bucket is classic defensives - but with a twist.

Companies like CSL (ASX: CSL), Ramsay Health Care (ASX: RHC), and ResMed (ASX: RMD ) offer essential services, strong market positions, and long-term demand tailwinds.

While their share prices have come off in recent years, there is value, and Scarpato says at the end of the day, these are providers of essential services.

“They’ve got hard-asset backing, they’ve been left behind by the market, but they're still solving big, under-addressed health problems,” he says.

ResMed, in particular, stands out. The rise of weight-loss drugs is increasing awareness of sleep apnea, driving demand for its devices, while U.S. manufacturing footprint is helping mitigate tariff risks.

5. An AI trade with actual value: The second-order winners

Lastly, while recognising there is plenty of money to be made in AI, Scarpato is choosing to approach the opportunity indirectly.

Rather than investing in semiconductors or data centres, he’s targeting the industries that will enable the AI buildout, particularly energy and commodities.

“The energy demand of these data centres is huge… and the grid isn’t ready for it,” he says.

That leads him to uranium, copper, lithium, and iron ore - the raw materials needed to power and build AI infrastructure.

Key holdings include Deterra Royalties (ASX: DRR), which provides exposure to commodity production without development risk through royalty streams, and Mineral Resources (ASX: MIN), which provides both iron ore and lithium exposure.

A playbook worth thinking about

The AI trade may define this market cycle, but it’s also becoming one of the most crowded.

Scarpato isn’t denying the opportunity. He’s just choosing to play it differently, given the real questions around the durability of earnings, and what companies like Alphabet Inc. (NASDAQ: GOOGL) and Meta Platforms (NASDAQ: META) will ultimately earn on the ~$1 trillion being poured into AI infrastructure.

In this environment, diversification isn’t just helpful... it might be the only free lunch left.