Fast5AItoSpaceJuly26

From AI to Space Five forces reshaping next-generation tech The first phase of artificial intelligence (AI) was defined by technological breakthroughs. We think the next phase will be defined by infrastructure, commercialization and where AI creates lasting economic value. These are the five shifts we're watching most closely.

Perspective from 1 | AI Is Breaking the Adoption Curve Franklin Equity The AI investment cycle is accelerating faster than any technology platform in history. Falling inference costs are making AI accessible to a much broader range of applications, and we're seeing demand increase as costs come down. At the same time, hyperscalers continue to invest unprecedented amounts in data centers, networking and compute to support that demand. What stands out to us is how quickly the cycle is unfolding. AI is compressing decades of technology adoption into just a few years. Adoption, infrastructure investment and commercialization are happening in parallel rather than sequence, creating one of the largest infrastructure buildouts the technology sector has experienced. Matthew Cioppa, CFA Portfolio Manager Franklin Equity

Realized Revenue Trajectory Time-Aligned to Year Zero $bn/Year, Adjusted for Inflation

100 3 x faster than any prior wave

0 Year 0 Year 1 Year 2 Year 3 Internet (1995) Mobile apps (2007) Cloud (2010) GenAI (2023)

Sources: Exponential View analysis; US Commerce; company filings; UBS; US Bureau of Labor Statistics. Note we use the first full year of revenues so have started GenAI measurement from 2023.

Not FDIC Insured | No Bank Guarantee | May Lose Value

2 | The Next Constraint Isn't Intelligence, It's Infrastructure As AI moves from experimentation to widespread adoption, the challenge is no longer building better models; it's deploying them at scale. That depends on compute, connectivity, power and, over time, space. We increasingly view these as one infrastructure ecosystem rather than separate markets. More capable AI doesn't create demand for compute in isolation; it drives demand across the entire stack. More compute requires more networking, more power and greater connectivity.

Compute Connectivity Power Access to Space Train and run increasingly Move vast amounts of data Reliable, scalable, Extend communications, sophisticated models. with low latency. affordable energy to connectivity and, ultimately, meet the requirements computing beyond of AI infrastructure. terrestrial networks.

3 | Space Becomes Part of the Stack As AI scales, it demands more compute, which in turn requires more networking and more power. We think space ultimately becomes part of that infrastructure stack, extending communications, connectivity and compute beyond what terrestrial infrastructure alone can provide. SpaceX is a good example of how that transition is unfolding. Rather than building a single launch business, it has developed complementary platforms across launch, communications and AI infrastructure. We think that reflects a broader shift as commercial space evolves into another layer of the infrastructure supporting an AI-driven economy. We have followed companies like SpaceX while they were still private, which has also influenced how we think about these changes. It has given us an earlier perspective on how new technologies and infrastructure platforms develop, often years before they're fully reflected in the public markets.

Commercial Space Is Becoming Core Tech Infrastructure

Connectivity Global connectivity anywhere on earth

Launch & Logistics Access to space and in-space logistics that enable the ecosystem

Data & Infrastructure Building the backbone for the data-driven economy

Defense and Mission- Critical capability for national security and resilience Critical Infrastructure

Future Compute Enabling compute at scale on Earth and in Orbit