Telix Pharmaceuticals Ltd (ASX: TLX) shares were dominating headlines yesterday after the biopharmaceutical company’s shares crashed almost 12% in a single session. 

Investors were exiting their positions in Telix after the company announced a $3.3 billion merger with German company ITM. 

What is the merger?

Telix announced a merger with ITM Isotope Technologies Munich SE, a global leader in therapeutic radioisotopes. 

As reported by Laura Stewart yesterday, the deal could create a radiopharmaceutical powerhouse, with combined estimated 2026 revenue over US$1.3 billion and deeper supply chain security for Telix’s growing pipeline.

Telix said regarding the deal:

The merger will further strengthen Telix’s leadership as a vertically integrated radiopharmaceutical company with the capabilities required to develop, manufacture and deliver innovative treatments to patients globally. The combined organisation will be uniquely positioned as a radiopharmaceutical industry leader, differentiated by a world-class scaled isotope manufacturing business with a validated global distribution network, a market-leading commercial precision medicine platform and the industry’s most extensive therapeutic radiopharmaceutical pipeline.

However investors seemingly were unimpressed by the announcement, as Telix shares fell over 11%. 

Telix shares remain up 38% year to date. 

What is Bell Potter’s view?

Following the announcement, Bell Potter provided updated guidance on Telix shares. 

The broker’s view on Telix’s proposed merger with ITM is broadly positive from a strategic perspective, with the transaction providing Telix with significant exposure to the rapidly growing lutetium-177 (Lu-177) market and creating a vertically integrated radiopharmaceutical company spanning isotope production, drug development and manufacturing. 

However, Bell Potter also recognises the near-term risks, including approximately 24% ownership dilution to existing Telix shareholders, around US$302m of additional net debt, potential FY27 earnings dilution, and regulatory and execution risks associated with ITM-11 following the FDA’s recent Complete Response Letter. 

Overall, the merger strengthens Telix’s long-term strategic position and provides exposure to a potentially much larger radiopharmaceutical market. 

However the benefits are likely to take time to flow through to earnings, explaining the muted initial market reaction.

Once in a lifetime opportunity

Bell Potter retained its buy recommendation following the announcement and has an unchanged price target of $19 on Telix shares. 

The broker said they are yet to include the earnings impact from the transaction in our forecast,

Nevertheless, it represents a once in a lifetime opportunity to acquire a dominant share in the supply of Lu-177 that is very difficult to replicate. While earnings may take a year or two to realise, the underlying value is obvious. Maintain Buy rating.

The price target from Bell Potter indicates an upside potential of 20% for Telix shares. 

The post What is this broker’s view on Telix shares after yesterday’s crash? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has positions in Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Telix Pharmaceuticals. The Motley Fool Australia has recommended Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Australia’s artificial intelligence landscape has been in focus the past week after AI giant Anthropic signed an agreement to use part of a $32 billion data centre proposed for a site on Queensland’s Western Downs.

According to The ABC, the data centre is set to be the largest in Australia and will draw as much power as about 1.5 million average Australian households.

Anthropic aims to start using the centre in 2027 to power its artificial intelligence program Claude to answer user questions, rather than for training AI models.

What does it mean for ASX AI shares?

Anthropic’s agreement to anchor a proposed $32 billion data-centre development in Queensland is more than another major artificial intelligence announcement. 

It is a sign that the next phase of the AI boom is increasingly becoming a story about data centres, electricity, connectivity and physical infrastructure.

Importantly, the companies positioned to benefit may not necessarily be the businesses developing AI models themselves. 

Instead, they could include data centre operators, property developers, telecommunications and connectivity providers, electricity generators and infrastructure companies.

Here are three ASX AI shares to keep an eye on. 

Nextdc Ltd (ASX: NXT)

This ASX stock is one of the most obvious Australian-listed beneficiaries of increasing demand for data-centre capacity.

The company has been aggressively expanding its data-centre footprint as demand from cloud computing and AI increases.

The Queensland announcement doesn’t directly add revenue to NextDC, as the Western Downs project is not a NextDC development.

However, it provides another piece of evidence that AI companies are prepared to make substantial, long-term commitments to computing infrastructure.

Goodman Group (ASX: GMG)

Goodman Group (ASX: GMG) offers another way to gain exposure to the theme.

It is traditionally known for logistics and industrial property. 

However Goodman Group has increasingly positioned itself around data-centre development.

A significant proportion of the group’s development pipeline is now associated with data centres.

This is an important development because the AI boom is creating demand for a very different type of real estate.

A hyperscale AI data centre needs enormous amounts of electricity, fibre connectivity, cooling capacity and grid access.

That scarcity can potentially make suitable sites extremely valuable.

Dexus (ASX: DXS)

Dexus (ASX: DXS) is particularly interesting because it has an actual connection to the proposed Queensland development.

Dexus’s Australian Data Centres business will be working with partners on the Western Downs project.

That doesn’t mean Dexus will receive anything approaching $32 billion in revenue.

But it does give the company direct exposure to the development of Australia’s rapidly expanding data-centre infrastructure.

For investors, the distinction between project value and corporate earnings remains critical.

The post What does Anthropic’s $32b Queensland data centre mean for ASX AI shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Right now, investors are heavily researching and gaining exposure to artificial intelligence shares. However, there are many layers to the artificial intelligence buildout. 

• Pure-play artificial intelligence companies – Companies whose main business is building AI models and software. A direct bet on AI.
• Hyperscalers – Big tech companies like Microsoft and Amazon that spend heavily on AI and make money through their cloud and AI products.
• Picks and shovels – Companies that provide the infrastructure AI needs, such as data centres, chips, memory, power, and cooling.

There are pros and cons to each part of this chain. The choice comes down to each investor’s individual goals and beliefs on the AI buildout. 

What are the pros and cons?

Firstly, looking at the pure-play companies, the positive to targeting these stocks is you have the highest direct exposure to AI growth. This gives you potential for exposure to rapid revenue growth if a company’s AI product takes off.

On the flip side, there may be a higher risk and volatility. 

Competition is intense, valuations can be high, and companies may struggle to turn AI demand into profits.

Looking at the hyperscalers, these huge existing businesses provide diversification. 

Strong cash flows allow them to spend billions on AI infrastructure, which can generate revenue through cloud, software and advertising. 

However the negative side is that AI is only part of the overall business, so upside is less concentrated. 

Additionally, massive AI spending also creates high capital requirements and potential pressure on returns. 

Finally, the picks and shovels stocks. 

The argument for these companies is that you can benefit from many AI companies spending on infrastructure, rather than needing one AI model to win. 

The main drawback is that these companies are often capital-intensive and cyclical, making them vulnerable to oversupply, falling prices and shifts in AI infrastructure spending.

How to target each layer

For investors looking for options at each level of this buildout, there are several ASX ETFs to consider. 

For investors looking to target pure-play AI, one option is the Global X Artificial Intelligence ETF (ASX: GXAI). 

It offers exposure to companies directly involved in AI, including AI software, services and supporting hardware.

For investors looking for exposure to hyperscalers, an option to consider is BetaShares Nasdaq 100 ETF (ASX: NDQ). 

It provides exposure to major US tech companies investing heavily in cloud and AI products. 

Finally, for investors seeking a picks and shovels approach, Global X Ai Infrastructure ETF (ASX: AINF) and Global X Semiconductor ETF (ASX: SEMI) are worth considering. 

They focus on the physical backbone of AI, including power, data centres, semiconductors, connectivity and raw materials.

The post How to target the different layers of the artificial intelligence buildout appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has positions in BetaShares Nasdaq 100 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, BetaShares Nasdaq 100 ETF, and Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Amazon and Microsoft. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.