Theme 4: Democratising AI

Identify the sectors and industries that can reap huge benefits from AI applications, besides the “Magnificent Seven” US mega-cap technology stocks, through a cross-asset approach in equities, bonds and infrastructure.

Democratising AI

The dramatic outperformance of seven US mega-cap technology leaders, namely Amazon, Apple, Google, Meta, Microsoft, Nvidia and Tesla, since 2020 and again in 2023 has resulted in a level of concentration of global investment portfolios in these names that has not been seen since the Year 2000 Technology bubble and the 1970s Nifty Fifty phenomenon. In both cases, the groups of “glamour” stocks that had been bid up to extreme valuations came back down to earth over the following years, resulting in big drags on investors’ portfolios.

We prefer to increase diversification of investor portfolios which are potentially overexposed to these seven US technology giants. In place of these seven, supposedly the leaders in the generative Artificial Intelligence revolution, we look to identify sectors and industries that can reap huge benefits from AI applications.