The AI revolution is “the biggest platform shift since electricity” and, as such, will provide investment opportunities in smaller technology companies that are closer than ever to the big tech giants, according to one UK fund manager.
“We are firmly convinced that the winners of this new technology cycle, which actually started 18 months or two years ago with the ChatGPT moment (and) the AI revolution, will not be the same winners as the last technology ‘cycle,’” said Claire Bledel Boveri, co-manager of the fund. At Liontrust Asset Management, to CNBC's Arjun Kharpal last week.
“We're really focused on the opportunities underneath the Seven Wonders,” Bledel Boveri said, referring to a group of big tech stocks that comprise the company. alphabet, Amazon, apple, dead, Microsoft, Nvidia and Tesla.
She says many of these technology companies are ready to invest in AI applications, which the fund manager describes as an emerging club of highly valued companies, and one of a number of different layers growing within the broader AI industry.
“This year we've really focused on the AI infrastructure layer of this new technology stack,” she said.
“You have to build this new computing infrastructure before you can monetize it,” Bledel Boveri warned investors excited about AI. This includes silicon chips, semiconductor equipment, and the like Applied materialsShe added, and the companies responsible for laying underground cables and networks.
“So, Broadcomthe Amphenolthe AristaIn this world, these are all really critical components for scaling AI infrastructure. On top of that, you have template providers. “For the most part, we view these players as quite commoditized…it's a complete arms race to build these big, basic models,” she said. Large baseline models refer to machine learning models that are trained on large amounts of data.
At the bottom of the “stack” that makes AI applications, there are engineering companies “bringing AI to businesses and customers,” Bledel-Boveri said, adding: “The value right now still lies in the AI infrastructure layer, but we see a move up.” In the stack next year.”
Nvidia is the “major beneficiary” of the artificial intelligence boom
Bledel-Boveri believes Nvidia will be a major player in the AI revolution in 2025, drawing comparisons with… appleIts rise as a dominant player during the shift to smartphones.
However, understanding Nvidia's role in 2025 requires investors to view the Magnificent Seven company in a different light.
“The main misunderstanding about Nvidia is that it's a chip provider. Looking at the company through that framework…looking at this company through a backward-looking capex (capital spending) framework is fundamentally the wrong way to look at this company,” he said. Bledel Boveri said.
Apple co-founder Steve Jobs is credited with combining a failing operating system with sleek hardware in the mid-1990s, laying the foundations for it to ultimately capitalize on the smartphone boom that would emerge at the turn of the millennium.
Bledel Boveri sees Nvidia accelerating similarly to Apple.
“Nvidia is actually positioning itself to be the operating system for this new AI-infused software that we'll start to see hitting the market starting next year,” she added.
Nvidia has been a major beneficiary of the ongoing AI boom, now focusing on its next-generation Blackwell AI chip. The company's shares have nearly tripled so far in 2024 – An increase of more than 180% since the beginning of the year – making it one of the world's Most valuable Companies.
